Assignment two

1

On Friday 26 September the Dutch parliament announced that they have chosen three locations where windmills are going to be built on sea. Earlier, the parliament had given nine permits to build wind parks. These will be withdrawn. Minister Kamp of the Ministry of Economical affairs has stated that there will be five big wind parks instead of several smaller ones. This way, the parliament can save 4.2 billion Euros over a period of fifteen years. Furthermore, they can meet the agreements in the ‘Energieakkoord’ (Energy agreement) faster and these five wind parks will have less visual pollution than the several smaller ones. Not everybody is content with this decision, the municipality of Noordwijk thinks the construction is disappointing as the unique view over the sea will be ruined (NOS, 2014).

Elster (2007) states that an action is rational when it meets three optimality requirements: the action must be optimal given the beliefs, these beliefs must be well supported given the evidence and the evidence must be a result from an optimal investment in information gathering (Elster, 2007: 191). This does not mean that the beliefs are true, but the actor is convinced that they are. Furthermore, rational choices are subjective (Elster, 2007: 191). In this case, the actor is the government who sees the building of five big wind parks on three locations as the optimal. They have several benefits as they can save on costs, meet agreements faster and it causes less pollution. These are all advantages on problems that the government has to deal with. For example the economic crisis has led to measures the government needed to take in order to reduce the deficit (Rijksoverheid, 2014).  Even though they are aware of the resistance of the municipality of Noordwijk, they are convinced that this decision is for the best. They have based this decision on research and for example, a delegation of the Houses of Parliament have made a walk over the beach of Noordwijk to Zandvoort to look at the consequences of these wind parks at sea (NOS, 2014). This decision thus meets the three optimality requirements as they are convinced that is optimal when looking at their beliefs, it is supported by the evidence as it causes at least those three benefits and they have researched this.

Simon (1979) describes bounded rationality as when the goals of an organization cannot be connected operationally with actions, the decisions then will be judged against subordinate goals that can be connected. The formulation will depend on knowledge, experiences and organizational environment of the organization (Simon, 1979: 500). In this case, this can be applied in the form that the Dutch government wanted to have more green energy in the country, with the lowest cost and the smallest amount of nuisance. Maybe the other option of several smaller wind parks would keep the municipalities content and would lead to less nuisance, but they choose it anyway as it has benefits as saving on money. It could also be the case that the government did not know of other options and thought that this was satisfactory enough and therefore decided to execute it, even though they knew that this was perhaps not the optimal decision. Lastly, another alternative is that there were a few options in order to generate  more green energy, but that this was an option that did not need more research before it could be executed and of all the options, this was the cheapest. It could be the case that the three locations with five wind parks was not the optimal decision, but the most satisfactory.

·         Elster, J. (2007). Explaining Social Behavior: More Nuts and Bolts for the Social Sciences. Cambridge University Press.

·         NOS. Kabinet: drie locaties wind op zee. [http://nos.nl/artikel/702981-kabinet-drie-locaties-wind-op-zee.html]. 28 September 2014.

·         NOS. ‘Molens verpesten uitzicht over zee’. [http://nos.nl/artikel/703133-molens-verpesten-uitzicht-over-zee.html]. 28 September 2014.

·         NOS. Het wordt zo wel een heel aparte zonsondergang. [http://nos.nl/audio/634559-het-wordt-zo-wel-een-heel-aparte-zonsondergang.html]. 28 September 2014.

·         Rijksoverheid. Schatkist op orde brengen. [http://www.rijksoverheid.nl/onderwerpen/overheidsfinancien/overheidsfinancien-op-orde-brengen]. 28 September 2014.

2

Friedman (1970) states in his article ‘The social responsibility of business is to increase its profits’ that businesses do not have responsibilities, but that people do have them (Friedman, 1970: 173). According to him, businesses should only use their resources and engage in activities designed to increase its profits as long as it is within the rules (Friedman, 1970: 178). In other words, he states that businesses should focus on business and that social responsibility is a matter of the government. When looking at the literature provided about how rational people are, one could argue that people search for an optimum. In this case, people who work at a business organization should therefore indeed only try to increase its profits. The government would want to take its social responsibility, and indeed search for the best way to do it. It should then be a matter of the government and not of the business if everybody would fit the rational decision making model. If we however look at the bounded rational model, there are changes that businesses would not see themselves with the task of only making profits, but the alternative of also fulfilling their social responsibility. As I do not think people would always make rational choices, my position is that the task of businesses is not only to increase its profits. Along with the government, non-organizational organizations and other actors, businesses can take its social responsibilities and not only through people, but as a business itself.

·         Friedman, M. 1970. The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine. September 13, 1970.