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Unlimited liability

By Alex Epstein
web posted December 9, 2002

Americans believe strongly in the principle that an individual is innocent until proven guilty -- and thus consider it a moral outrage to hold someone responsible for an evil he did not commit. In response to reports of a handful of innocent Arab-Americans being mistreated since September 11, our politicians and intellectuals have reminded us repeatedly that scapegoating is unjust and un-American. This is true -- but it is completely ignored with respect to a far more common
scapegoat: businessmen.

Businessmen are the most popular culprit for nearly every problem in America today: from high prescription drug prices (blamed on "price gouging" pharmaceutical companies) to rampant obesity (blamed on "profit-hungry" fast-food franchises) to political corruption (blamed on rich business "special interests") to personal bankruptcy (blamed on "greedy" credit card companies) to declining moral standards (blamed on "debased" movie studios) to lung cancer (blamed on "evil" tobacco
companies) to murder (blamed on "unscrupulous" gun manufacturers).

The politicians and intellectuals who make these accusations insist the charges are justified. But are they? Consider the claim that high prescription drug prices are the product of a concerted effort by pharmaceutical companies to rip off the American public. Even a cursory investigation into the matter reveals that drugs are so expensive because of incredibly high development costs -- costs that would be much lower without crippling FDA restrictions that force pharmaceutical companies to go through a protracted, bureaucratic approval process, and that keep many valuable drugs off the market. Why, then, do we hear endless shrieks from "consumer advocates" about the evils of drug companies, but not a peep about the evils of the FDA? Similarly, why is the blame for problems that result from the misuse of fast food, credit cards, and guns heaped on the businesses that sell these legal products rather than on the individuals who misuse them?

Or consider the hated tobacco companies. The dangers of smoking have been widely known for decades, and those who get serious diseases from smoking do so only after decades of choosing to smoke. So why are those who sell cigarettes -- rather than smokers themselves -- held responsible for smoking-related illnesses? Or, even if one accepts the preposterous claim that smokers cannot choose to quit smoking, why condemn only tobacco companies, instead of, say, negligent parents for permitting their teenagers to smoke, or the government for not outlawing this supposedly lethal product?

Clearly, a ruthless commitment to facts and justice is not driving those who Blame Business First. And apparently, given much of the public's willingness to embrace anti-business "explanations" for almost every problem, the evidence is not driving them, either -- they just assume that any charge against business is true. This presumption of guilt is made possible because so many people believe that the businessman's motive -- the profit motive -- is evil. They are thus predisposed toward attributing any given evil to businessmen, whatever the facts -- and end up blaming countless businessmen for problems they did not cause.

Given the scapegoat status of businessmen, they are perpetually ripe for more punishment: more taxes (to make them finance "benevolent" social programs), more regulations (to curb their allegedly evil tendencies), and, especially, more lawsuits. Resentful smokers sue tobacco companies for their emphysema, distraught day-traders sue corporations for stock dips, and aggrieved cheeseburger-munchers sue fast-food companies for their clogged arteries. The incredible proliferation of such baseless lawsuits is a logical consequence of the belief that business is responsible for all the evils in the world. With unlimited guilt comes unlimited liability.

The mass scapegoating of American businessmen is a monstrous injustice. The profit motive, contrary to popular belief, is not an impetus to evil; it is a highly moral desire for earned success and material well-being. If a businessman, such as one of the swindlers at Enron, commits an act of theft or fraud, he should be prosecuted like any other criminal. But innocent businessmen should bear no blame or punishment for the wrongdoings of others -- and it is immoral to presume their guilt.

Unfortunately, America may learn this lesson the hard way. A record number of CEOs and corporate board members are leaving their jobs, for fear of becoming bankrupted by an opportunistic lawsuit or doing jail-time for unintentionally violating the new, deliberately vague accounting laws.

America cannot afford to lose the productive minds that its economic progress depends on. If Americans desire prosperity, they must learn that scapegoating business is both immoral and impractical -- that they cannot have their businessmen and eat them, too.

Alex Epstein is a writer for the Ayn Rand Institute in Irvine, CA. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead. Write to reaction@aynrand.org.

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