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I own a small manufacturing company with 45 employees. Business is tough right now—margins are razor thin and a competitor just undercut our prices by 15%. They can do it because they pay minimum wage and offer no benefits. I pay above market and offer health insurance. My employees have been with me for years. But I'm bleeding money. My accountant says I need to cut wages or lay off 10 people to survive. My competitor's owner sleeps fine at night. I believe treating workers well is the right thing to do—and I thought it was also good business. But now I'm not sure I can afford my values. Do I compromise my principles to survive, or hold firm and potentially go under? — Nice Guys Finishing Last in Louisville

Business & Ethics Debate: Ethics and survival. Westinghouse's worker welfare meets Adam Smith's market wisdom.

Debaters:George WestinghouseAdam SmithModerated by Stella Sharpe

penn7

Welcome to this Business & Ethics debate. Our central question: "I own a small manufacturing company with 45 employees. Business is tough right now—margins are razor thin and a competitor just undercut our prices by 15%. They can do it because they pay minimum wage and offer no benefits. I pay above market and offer health insurance. My employees have been with me for years. But I'm bleeding money. My accountant says I need to cut wages or lay off 10 people to survive. My competitor's owner sleeps fine at night. I believe treating workers well is the right thing to do—and I thought it was also good business. But now I'm not sure I can afford my values. Do I compromise my principles to survive, or hold firm and potentially go under? — Nice Guys Finishing Last in Louisville" George Westinghouse, you've said "Business success and ethical behavior are compatible—but require innovation" — but I want specifics. Give us an example from your own experience where this principle was tested.

George Westinghouse

The adoption of alternating current (AC) power faced fierce opposition. Mr. Edison favored direct current, and he had built his empire upon it. To compete, we had to demonstrate AC's safety and efficiency beyond any doubt. This meant investing heavily in research, development, and educating the public, despite the financial strain. It would have been easier to compromise, but innovation, standardization and a commitment to safety ultimately won out, proving that ethical business practices can indeed prevail, even against established interests.

Adam Smith

Indeed, as Mr. Westinghouse has noted, innovation can be a powerful tool in overcoming adversity, though I must confess that his electrical machinations are quite beyond my ken. It seems to me that the question at hand is one of balancing self-interest with the well-being of one's employees. A prudent manufacturer, as I discussed in Book I, Chapter VIII, recognizes that a well-compensated and healthy workforce is ultimately more productive. While reducing wages may offer short-term relief, it could lead to disaffection and decreased output, a rather self-defeating outcome in the long run.

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