Article link: http://www.democracynow.org/2014/9/8/big_tobaccos_child_workers_young_laborers

This article talks about US tobacco firms are hiring children for working at the tobacco farms. In this case, it is a clear child labor issue that relates to social responsibility. The article also mentions that “many suffer from “green tobacco sickness,” or nicotine poisoning”, which “children are especially vulnerable to toxic pesticides since their bodies are still developing”. Therefore, US tobacco firms are not only illegally hiring children for adult labor, but also causing illness among them.

US tobacco businesses are legally barred from selling cigarettes to children. This means the demand for tobacco is forced to drop, and it harms US tobacco companies’ total sales. As the sales drop, US tobacco firms are making less revenue. Thus they have to find a solution to maintain profitability. Child labor is a way to lower the cost of production, and leads to a decrease in unit cost. Therefore, the unit profit will increase and the firms are able to maintain profitability with a lower demand.

Milton Friedman believes that a company’s only social responsibility is to increase profit, which seems like the tobacco firms are making the correct decision by applying to his theory. However, I personally consider that these companies are using the theory is an incorrect way. As the media explores the Child Labor issue behind the tobacco firms, it is not only against the law, but also harming companies’ reputation because it is negatively affecting the society, which may lead to a sudden drop in demand. This will certainly harm these businesses’ profitability. Therefore, in my opinion, I believe that Friedman’s theory is correct, but it doesn’t mean that a firm can do anything for profit maximization, ethical and social responsibility objectives play an important role in the decision making process.