The Sept. 16 New York Times carried a story about the Aug. 14, 2003, electricity blackout and about deregulation as a cause.
The blackout cost an estimated $7 billion to $10 billion.
The story quoted Kellan Fluckiger, executive director of the electricity division at the Alberta Department of Energy: "The most serious mistake we can make is pretending that markets do things that they do not do. Markets allocate risk, they allocate capital, they provide price signals. Markets do not have a conscience, they do not provide social policy, and they do not do things they are not paid to do."
Are there lessons for the auto industry? This might seem a stretch, but here goes.
Ford Motor Co. should be making about the same profits globally as Toyota Motor Corp. Ford sells a similar number of similar vehicles. Toyota made about $11 billion last (fiscal) year and about $10 billion the year before.
The Japanese are said to have a culture of social consciousness, and it is said that we do not. For about 10 years Toyota has aggressively pursued hybrids. I do not recall a single suggestion in the media that those expenditures are justified on financial grounds, only that hybrids advance social goals such as cleaner air and reducing gasoline imports.
Toyota has a policy of "continuous improvement." If something is wrong, fix it now. That has social value.
Do advantages accrue from being socially responsible? Do we ignore those advantages, if any, because they are beyond our present ability to quantify? Is being socially responsible the key to saving the costs of blackouts and to profitability such as we now see when we compare Ford with Toyota? Does Toyota's success prove that being socially responsible is profitable?