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Frank tries to refute Friedman, as Arrow previously did. Frank considers the one responsibility that Arrow ignores, that the action that the CEO of a company takes in self interest, and may also be socially responsible. Friedman offers cloaking. Repeated interaction, the use of paying on time, all look socially responsible but they are not. They are forms of prudence. We need them. These types of interactions, which involve honest people are illustrations of prudent self interest work.

When there are manufacturers and suppliers there will arise a “one shot dilemma”. This is when one knows they can cheat and also get away with it. This is an opportunity of a certain behavior, for example: a law firm can pad the bell and the client would not know it. another case is where a person might need advice on a mutual fond or a stock investment from a stockbroker but considering the broker makes a commission, the person wouldn t want to use him. These are all situations in which there are opportunities to be socially irresponsible, However he is defining social responsibility as refraining from cheating in a one shot dilemma and often it is in the interest of the company to refrain from both self interest and social responsibility if the person you may perhaps swindle is sustainable in competitive environments.

Cloaking Blame worthy?

cloaking profits or self seeking activity by a company that masquerade as socially responsible. Why shouldn t people do this? Perhaps because we rationalize , we make it seem all right when it really is not. Producing an appearance of social responsibility when we are entirely motivated by self interest. The problem with this is that it harms the foundations of a free society, and contributes to undermining foundations of a free market society because it subscribes to the view that CEO s have social responsibilities. There really are none. supporting the ideology that there are social responsibilities when there aren t.

Cloaking is like when a large corporation moves into a small town and provides amenities to that community like purchasing fire engines. The real mistake is building up the town where it will attract better workers and reduce wage demands and theft.


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