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Etix.org
This site is devoted to an attempt to make the market economy better.
The problem
The idea came when I was reading Joel Bakan's excellent book — The Corporation — about globalization and corporations. To summarize: the problem is Corporations don't have a conscience, don't feel responsibility — we, humans usually do. Corporations are simple "money-making machines". In the push from their shareholders to maximize their profit they're forced to put costs on third parties (those not involved in the transaction) and draw benefit from the public good. These anomalies are called negative externalities in the economic slang, and considered to be bad for the optimal allocation of resources.
The answer of economists and why it won't work
The economists answer to negative externalities is using taxes to counterbalance the negative effect, like the pollution tax. While they can reduce the harmful activity, they don't cure the damage already done. (see ozone leak) Also governments usually have no idea of the extent of a particular externality and can react only years later. They often don't have the incentive to introduce externality taxes, e.g. when the externalities are bad for the people, but good for the GDP, like the carbon-dioxide emission in the States.
In theory poeple can force their leaders to regulate companies through the means of the democracy, but there are too much things to regulate, and the pace of changes in economy got lot quicker than people can react through elections in every 4 year.
So what can we do then? We can collect information about externalities and we can skip the long and buerocratic steps of government regulation and regulate the market with our decisions when buying products, services and shares. Perhaps all this above and not instead of the government regulations.
- Now: Business -> Information -> People -> Government -> regulation -> Business
- A better way: Business -> Information -> People -> ETIX -> Business
Corporations are not humans
To reduce the externalities humanity has invented ethics, which was working as long as humans — known by others — were behind the decisions and the harmful activity. They could be excommunicated which deterred them from doing bad things. But no such threat for corporations. They cannot be excommunicated nor they feel ashamed. They can be sued, but practice shows it's always profitable to break the law or cause harm to other people — most evidently in the third world countries, or do harm to environment. On the other hand the law itself isn't capable of regulating everything.
Ethical index — what's missing from the stock index
We must accept companies are not humans. We cannot be angry with them — they are not living, just constructs like the money itself. What if we translate the public benefit to the corporations' language — the money? There is a perfect means — the Stock Index — to measure a particular company's profitability. What if we add another one to measure the harm made by a company? Perhaps we can reward their benefit (beyond the business benefit) too. Let's call it Ethical Index = ETIX. Are there objective indicators out there? Will we be able to settle on a company's index? I beleive we can. It's hard and kind of subjective, but in the age of the internet at least we have the means to gather enough information from around the globe. And I beleive the benefits from this index will overcome the ambiguities risen. With some information we can give a twist to the market economy (which I beleive is the best economic system so far), and slightly shift it from driven by greed to driven by reason. Let's turn the revolution of information into our profit!
This is why this site has launched. To gather information, to evaluate the different companies (and products) by the users and set up an ethical index based on user surveys. I think in the beginning this index will be inaccurate and hard to compare between the companies, but as time goes we will have more information, more opinions and can elaborate better methods. If this index will be accepted by many people, this could function as an ethical investment guideline. The Banks, the Pension Funds could then offer ethical investment packages, also the consumers can choose products of companies having higher index. This could move the market economy into a more righteous, a more efficient distribution of resources, and could lessen the exploitation of environment and reduce the gap between the rich and the poor.
About me
I must admit I don't have a degree in economy, but in my whole life I was employed for using my brain: to solve problems, to invent new things. I am interested in economy as in the current economic crysis I guess everybody does. For me the most important aspect of it is how to make the life better on this planet and not how to make big money :).
As of my carreer: First I completed the Technical University in Budapest and became electric engineer, but later I went on as software engineer, graphic designer, art director and now I'm a web designer. I beleive if this idea wons on Google Project 10^100 competition, ETIX will give a new spin to market economy and open a door to a better World. Maybe I'm too optimistic, but I think nothing on World has born out of pessimism. Go and vote here for this idea.
Laza
Budapest
, Hungary