The True Problem with Major Development Firms!!

In my previous post, “Does Major Development Firms = Heartless, Money Hungry Monopolists?” I explained how major development firms have displaced many residents from their homes by jacking up rent prices for the land at outrageous rates. I illustrated this by explaining the crisis that many residents of Blue Star Mobile Home Park in California are currently going through. Many of these residents are being forced into poverty because they simply can no longer afford the unreasonable prices Kort and Scott Development firm have raised their rents to.

The major problem with development firms such as Kort and Scott is not one of legality. It is very much a moral issue in that these development firms neglect to take into account the negative externalities their business causes for others.

These businesses tend to conduct business with an ethical egoism approach. They fail to consider deontology and are only concerned with promoting their own interests (maximal profit). Unfortunately, this kind of approach tends to result in negative externalities for society.

In the case of Kort and Scott, the externalities in which they have caused has a more direct and apparent effect. They are single handedly responsible for causing many residents of Blue Star to become homeless.

Another less apparent externality the development firm is contributing to is the poverty rate.

By making it impossible for Blue Star residents to afford rent, many of these residents are forced to leave their mobile homes with little to no money and nowhere else to live. Because of this, many of these residents are forced into poverty without the resources and skills needed to recover. A great percentage of these residents are elderly and cannot obtain a job that provides enough income to get them out of poverty once sunken in (i.e. raising the poverty rate).

For these reasons, it is important for large corporations and businesses to not only make sure they are abiding by legal regulations, but it is also important for them to consider issues of morality and market weaknesses. To ultimately stimulate the economy, large corporations and businesses must take a more ethical approach when attempting to obtain maximum profits. They must make a conscious effort to minimize externalities.

A company that is financially successful while minimizing its negative externalities helps to stimulate the economy more than one who completely disregards negative externalities all together.