The Place of Morality and Government in Low Value Product Development

A company is fundamentally in business to make money. There are many so called "low value products" that could prove extremely beneficial to a large number of people, but are not likely to be profitable from an economic point of view. This situation creates a complex problem that incorporates economics, morality, private industry, individuals and government. It is always interesting and difficult when big business, government and ethics are thrown together, and this problem is no exception.

First, it needs to be established whether the low value product the company is considering developing might not turn a profit, or if it definitely will not be profitable. If there is a reasonable hope that the product is at least a break-even proposition, the company is much more apt to consider it than if it is certainly going to result in the loss of money. All of this, including the moral aspects of the question, has to be understood within the context of economics. A company is simply not going to do something out of the good of "its" heart, just because it is "the right thing to do". A company must be convinced that by investing their time and money into a certain product's development, they will directly or indirectly profit from it. Thus, all incentives aimed at getting a private company to bring a product to market that will benefit the public, must in some way benefit the company.

There is certainly a moral obligation for developed countries to at least attempt to assist those of the third world, but the burden may not lie with private industry. Before turning to the issue of how to get private industry to invest in low value products, the role of government needs to be explored. The government's role as a provider of incentives will be explored later, but it's also necessary to look at the possibility of government acting as the lone low value product developer, leaving private business out of it. This can be broken down even further: the governments of underdeveloped and developed countries providing for their own people, or the governments of developed countries providing for the common good of all countries. A government is set-up fundamentally to act for the common good of that nation's people. Thus, the government of a country, whether developed or third world, has a moral obligation to do everything in its power to provide for its people, including providing research funding for the development of these low value products. Third world governments also have an obligation to seek, support and facilitate the help of industry and government of developed nations.

The question becomes trickier when you consider whether developed nations have the moral obligation to provide for all nations collectively. The United States has a tax system that collects and reallocates, and in theory spreads the wealth and provides for all. This is also the case in Socialist countries. So, some of this money should be spent on developing these low value products, which will act for the common good of the country. However, a distinction has to be made between a low value product that benefits all people, such as the conversion of biomass to ethanol, and one that would be developed by a first world country, but only for use in the third world, such as the anti-malaria vaccine. If the latter is true, the government is going to run into complaints from its people such as, "Why are you doing this? You should be providing for our problems first, let their government take care of them." This creates a whole new moral dilemma.

Returning to the question of encouraging private companies to invest in low value products, a number of incentives can be created. First, it will be much easier to convince a huge company with billions of dollars in sales (like Pfizer, Johnson & Johnson, Glaxo Wellcome, etc.) to invest their money in a low value product. They can afford to develop a product that is not extremely profitable, because they can make the money up in other areas. They also have pre-existing facilities and other capital, which would lower the inherent fixed costs of developing the product, increasing the chances for potential profit.

Certainly the best incentive for a company is money. If the company can be convinced that the investment will in fact be profitable, on a long or short term basis, in addition to being the morally right thing to do, the product will be produced. It can be demonstrated that the actual "profit" may not be in something tangible like money. If the company decides to produce an anti-malaria drug at a small loss, it may still be extremely profitable in the long term for a variety of reasons. The company gets exposure and "good press" and thus free advertising for doing something morally right. Most large companies have programs in place that deal specifically with this type of issue. They have programs where they do things for the community, or contribute to charities, so producing a low value product would be similar, just on a larger scale. In a similar vein the company is getting their name circulated and thus may improve the sales of their other more profitable products both in the target country and domestically, thus making sound business sense.

The company can also be given less abstract, more tangible incentives. Most of these incentives require government participation. A company could receive federal tax breaks, thus making the idea of investing in low value products more palatable. This also works well for governments that want to take an active role in developing these important products, but don't have the infrastructure to do it themselves. By promoting private industry to do it, they are contracting out things they want to see done. Instead of tax breaks, the government could provide direct subsidies for the research. Another possibility is for the government of the third world country to provide incentives to the company to develop the low value product. The government could lower or erase any existing tariffs on that specific product, or perhaps on all of that company's products, again making it economically advantageous for the company.

This is a complex problem, but one that happily has a variety of solutions. With the help of incentives, perhaps from the government, private companies can develop and produce low value products. The company is doing what is decidedly morally right, can benefit themselves, and perhaps most importantly, can help improve the lives of millions of people.

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