When Corporations Get Stung, They Listen Up

Philip Morris is spending $100 million to revamp its image, launching a television and Web campaign that warns--surprise, surprise--cigarettes do kill after all. What is driving the company’s effort to “educate” the public about the dangers of smoking? A sudden burst of concern about the millions of lives devastated by the tobacco industry’s years of outright deceit?

Hardly. Rather, it is the sting of the successful lawsuits already brought against the cigarette makers and the fear of the ones pending.

In another about-face, State Farm, after its practice of using inferior parts for auto body repairs resulted in a record $1.2-billion award this month, announced that it will temporarily halt the use of replacement parts that had not been approved by manufacturers. This reversal comes after years of arrogant stonewalling, even after a February 1998 Consumer Reports study that found that generic parts often fit poorly and could pose a threat to passenger safety.

The corporations did not suddenly acquire a conscience. Instead, a “conscience” has been forced on them.

The awakening public has begun to express convincingly through jury verdicts a simple proposition: There is absolutely no way to punish and deter the kind of greed that causes corporations to put profits over people other than punitive damages.

Corporations, after all, are the only entities under the law unburdened with a conscience. People have a conscience, feel guilt, experience compassion and ultimately must live with themselves.

Not so with corporations. Although there are exceptions, the “goodness” of a corporation is usually defined by its bottom line. If the corporation makes money for its shareholders, it is considered good. If it fails in that one area, it is considered bad.

Granted, smaller businesses are more likely to be imbued with the moral structure of its leadership. Yet the larger and more impersonal the corporation becomes, the more moral issues give way to fatten the bottom line.

No better example exists than the tobacco industry. It is now beyond debate that the tobacco companies sell misery and death for profit and that their product has absolutely no socially redeeming value. Still, shareholders continue to invest in tobacco stocks because the industry remains profitable.

Indeed, the only thing that seems to adversely affect tobacco stocks is the occasional adverse liability ruling in the courts, which might have a negative impact on the bottom line.

Despite Philip Morris’ image makeover, where is the tobacco industry’s conscience? Would a person knowingly and intentionally purvey misery and death for the sake of financial profit? No, except for the few who do not let conscience stand in their way. Those individuals society brands as criminals and penalizes with prison and, sometimes, death.

Society cannot put a corporation that decides to profit from people’s misery and death in prison. Society cannot give the death penalty to businesses that choose to save money while allowing people to burn in vehicles they knew were unsafe, as was the case with General Motors Co. and Ford Motor Co.

We cannot do much to punish or deter the amoral acts of some corporations. We have only one remedy: Hit them with punitive damages. A good, hard hit in the pocketbook of the errant corporation can make reprehensible decisions that seemed at first glance profitable, ultimately too costly. The prospect of punitive damages forces a corporation to place a line-item entry on the balance sheet for protection of the public.

The bottom line becomes this: Punitive damage awards are the public’s only way of imposing a conscience on a corporation.