Saturday, January 9, 2010

One Wrong + One Right Does Not Make a Right Either

Better a little with righteousness than much gain with injustice. Proverbs 16:8

Have you ever priced a hearing aid? These tiny electrical gadgets, some small enough to fit completely in the ear without being seen, range in cost from $1000 to $4000. I feel sure that no hearing aid manufacturer would make this information public, but I bet the raw materials on each hearing aid cost about 25 cents. A say this based on the fact that I can purchase an AM/FM radio in the dollar store (the one where everything costs a dollar). Hearing aids are made with the same raw materials as that radio, but fewer of them. As editor of a magazine for people with hearing loss, I know the industry rationale for the other $999.75 worth of cost on even the basic model: research and development. It is true that there are many scientists and engineers working on improving the quality of hearing with amplification. It’s also true that all of the major hearing aid manufacturers not only spend hundreds of thousands of dollars advertising their products to audiologists and hearing aid dispensers, and have nice profit margins, they each also have a philanthropic spin-off organization or at least, some sort of philanthropic program within the company.

This is a pretty common thing among large corporations, and in fact, many people are influenced in their purchasing decisions by whether or not the company in some way “gives back” to the community or the world. I like to eat small, compressed wheat rectangles for breakfast. Recently, one producer of this type of cereal advertised that they are giving away a million bowls of cereal. My purchase of said cereal is going to generate another free bowl of cereal for some hungry kid. “Good!” I think. “That’s nice. If only all corporations would give back in this manner, the world would be a better place.”

Then it dawns on me that if I weren’t be overcharged for my bowl of cereal, Post company wouldn’t have a margin of profit so far above its shareholder expectations that it is able to give away a million bowls of cereal without ticking off the shareholders, cutting back on salaries or advertising, or even lowering office thermostat in winter. The same is true about hearing aid companies. Should I feel good that Starkey Hearing Foundation gives away on average 38,000 hearing aids each year at the expense of those honest hard of hearing folk who bought one of their products?

According to a 2009 Consumer Report, hearing aids are marked up on average 117 percent after all the costs of materials, research and development, advertising and professional services rendered by audiologists are taken into account. That’s a free-market economy at work. Consumers will pay it so companies can charge it. But I have to ask: In all this economic theory played out, where is justice? Oh, right, it’s in those one million bowls of free cereal and in the 38,000 hearing aids a year that the company is giving away. In my opinion, that is dissociated, post-coital justice: an attempt to make things right with a third party after having screwed your customer. Here’s a radical idea: Why not offer the product at a price where the margin of profit is not obscene? Post Shredded Wheat cost $2.98 at my local supermarket. If they adjusted their price so that they couldn’t afford to create a philanthropic program to feed a million, I bet more of America’s truly poor people could afford to buy it. Then those poor people wouldn’t need to stand in a bread line in front of some social services organization to get their free bowl of cereal. And if you think I’m harshing on Post, you should know that their bite-size wheat cereal costs almost a dollar less than the same product under the Kellogg brand.

And yet, it seems an almost insurmountable feat to radically lower the price of cereal, not to mention hearing aids. It would shake the industry if Post or Starkey started pricing their products with a modest profit margin. It could topple the economy! I fully recognize that it’s not just as easy as deciding to do the right thing when it comes to large corporations that are industry leaders. I also fully recognize that those corporations are made up of individuals who will be held accountable by a just God for their daily decisions.

But while I’m pointing the finger at large corporations and the individuals who run them, I should note the three fingers pointing back at me. First of all, I could well be a shareholder of one such company. I have no idea if I am or not. As I’ve mention in a previous post, our global economy and the convoluted way in which we invest money today, through funds, is a huge barrier to tracing my investment dollar and its impact on society. I could be part of the problem! Secondly, small businesses employ over half of private sector employees in the United States in approximately 29.6 million small businesses, according to the Office of Advocacy, which means small businesses play an important role in the economy and also have ample opportunity to justly or unjustly price products and services. Thirdly (the pinky finger), what am I doing as a consumer to let large corporations know that I’d prefer that they price justly, enabling more people to afford their products and services, than to overprice and then scrape off some of their crumbs to the poor, perpetuating a “welfare mentality”?

Contemplate this: Am I economically supporting, philosophically endorsing or perhaps even actively participating in unjust gain?

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