Archive for May, 2012

Machan’s Archives: Is Commerce Decent?

Machan’s Archives: Is commerce decent?

Tibor R. Machan

It is not a waste of time to revisit the topic of business bashing, especially in light of President Obama’s current attacks on wealth creation. He says prefers job creation, as if the latter were possible without the former. (Well, in a tyrannical system it may be, for a while; the population could be coerced to work, in, say, labor camps, even if no one were to want the work being performed! Public works projects have something of this about them, actually!)
Some might consider it odd to question whether business or commerce are decent endeavors but given that business is held in low esteem by many cultural commentators, as well as by Hollywood, by pulp fiction writers like John Grisham, by famous directors such as Oliver Stone, and playwrights like the late Arthur Miller (whose Death of a Salesman depicts commerce as a pathetic, lowly profession), the question is not at all negligible. And then there are the likes of Harvard University professor of government, Michael Sandel, whose recent book What Money Can’t Buy: The Moral Limits of Markets, alleges that there is not much of moral worth to what happens in free markets! (Not that there is anything new about any of this. Earlier Charles Baudelaire, the famous and widely admired French poet, had said that “Commerce is satanic, because it is the basest and vilest form of egoism. The spirit of every business-man is completely depraved.”)

Should we accept this condemnation of a field of work—and its practitioners—that has managed to create prosperity and wealth for not only those who succeed in it but those who are indirect beneficiaries of its products such as universities, museums, and think tanks?

Most people take it for granted that medicine, education and science have merit and those doing work in those fields are doing the right thing. They can claim credit for having chosen a fine calling or vocation. But the same is not so with business. A clear indication of this is that there is a great deal of talk about the social responsibility of corporations, and how companies should give back to the community in contributions, something few other professionals hear of. Are college professors being implored to do likewise? No, because their work is deemed to be worthwhile in and of itself. And why is it necessary for people in business to “give back”? Have they committed theft so they need to atone for it by returning the goods they stole? No, there is something else behind the hostility toward business.

Throughout human history, East and West, commerce has been demeaned. Plato depicted the trader as a lowly sort in his most famous dialogue, the Republic. Of all types of sinners who gather in the temple, Jesus picked on the money lenders and the Prince of Peace violently attacked them, sending a signal that Christianity seems to have embraced throughout its history. The idea that money may be lent for interest is still attacked by some moral philosophers, as if foregoing the benefits of liquid assets does not deserve to be compensated.

Is this all OK? Should we be ashamed when we embark upon a career in business? Is it a lowly profession? Say, akin to prostitution or being a prison guard at a concentration camp?

If the answer is no, as I believe it should be, why have so many prominent figures shown utter contempt for commerce and its professional arm, business? What accounts for this?

A good place to begin is with Aristotle, the famous ancient Greek philosopher who had little respect for activities aimed at prosperity. He believed that the highest form of human life is that which is devoted to contemplation. Theorist who contemplate the eternal verities are doing the most honorable thing, and this idea is still with us. Professors and educators in general are usually held in high esteem. The Nobel Prize is usually given to theoreticians, not those who put theories into practice. The bad guys in novels, movies and TV are usually ones trying to make a profit.

One problem with Aristotle’s ethics is that he believed what is exclusively important in our lives is that we have minds. And to be good for him meant for us to be exclusively focused on what the mind uses, namely, ideas. Intellectuals, then, seem to live the most if not the only worthy lives.

This is not really true, however. We are not just mental beings – we are embodied. And we need to be good at applying our thinking to all facets of our being, not just to abstract ideas. We need to succeed as living, thinking biological entities not only as intellectuals. (Of course, there is much debate on just what Aristotle meant. But what we might call “intellectualism” has been the most influential aspect of his ethical reflections.)

Oddly enough, it is one of the main virtues Aristotle himself identified, namely, prudence which gives commerce and business their clear link with morality. To be frugal, industrious, and heedful of the bottom line is something demanded by prudence, provided we view ourselves not simply as mental but as biological (albeit thinking) entities.

Such an understanding of human life shows that professionals in business are doing important tasks, every bit as much as do professionals in medicine, science, education or engineering. Which does not mean, of course, that such professionals cannot fall prey to the temptation of corruption. But this is no less true in education, science or any other profession. There are quacks in medicine, frauds in science and so on, just as there are cheats in business. But as a profession, business isn’t like white slavery, pimping or fatal drug pushing, endeavors that are inherently morally questionable.

Why is all this of significance? Especially after September 11, 2001, where terrorism was directed at both the major substance and the greatest symbol of commerce, the World Trade Center, it should be evident that whether business is a good thing is disputed even today—again I point to President Obama’s hostility toward wealth creation—never mind the evident beneficial nature of the institution.

Not everyone follows what is evident or reasonable. Moreover, many who embark upon business, professionally or otherwise, haven’t the faintest notion of what makes this profession worthwhile or if they do they have a hell of a time articulating the case for it. They engage in it absent-mindedly and when challenged do not know what makes it honorable apart from its contribution to the wealth of a nation! There are many people in business who even look upon what they do with self-deprecation and cynicism. They see themselves as so called practical people who have abandoned naïve idealism and thus can pursue business because, well, they do not care whether it is immoral, amoral or moral.

Certainly such people aren’t going to make convincing defenders of this very large element of Western culture. And a defense the institution does require, given the bad press it has had throughout history and continues to get from many circles—philosophical, theological, ethical and cultural.

Furthermore, when professionals turn cynical about what they do, they aren’t going to be inclined to worry about doing it properly, ethically. So, in consequence of widespread business bashing the practices of business can suffer. The usual approach is to say that all that matters is whether the law is obeyed, never mind about ethics and decency.

The law, however, is not a sufficient guide to proper business conduct because it changes from country to country, even state to state. Unless those in business are guided by certain sound principles of business ethics, they will eventually lose their way. It is sometimes held that philosophy and its various branches are for people who are lost in the clouds, absent minded people, but this is a good example where that view just doesn’t cut it. Without some understanding of the philosophical underpinnings of both the criticism and the defense of business, the profession will always suffer from moral ambiguity. And that means it is going to be unstable and morally suspect.

None of this means that all people in business need to become well versed in the field of intellectual history. But they need to be aware that sometimes they might have to dip into that field, consult those who have contributed to the on-going dialogue about the merits of trade, commerce, finance, capitalism, market processes and so forth. They need to be aware that there is such a conversation going on and it has strong implications for the way business is understood and depicted throughout the world. And it may even have an impact on how people in business are treated, whether respected or held in contempt, something that as we know can have a powerful impact on the lives of those professionals.

There is a lot of discussion afoot about the origins of the Holocaust but it is not mentioned often enough that one thing that contributed to it is the hatred of business. Jews, unlike Christians, did not have any religious objections to trade and finance, quite the contrary. When they settled in Christian countries, they were usually the ones who took up commercial trades. Often this gave them considerable clout, for which they were then despised, resented, even envied. This is not a negligible portion of the story of one of human histories worst events. (And it is important, also, to realize that despite being Jewish himself, Karl Marx found the Jews open to severe criticism on the grounds that they were the quintessential capitalists, traders! This is not all that far from why the Nazis found Jews objectionable.)

People in business, like those in engineering and medicine, work in a field that unabashedly champions life here on earth. As such, their work is not always well received and is often demeaned, in fact. For capitalism, free markets and commerce in general to gain moral standing, this needs to be rejected and the reasons why the critics are misguided need to be understood—even by those in business, sometimes! A good beginning might be to explore the implications of another observation made by Charles Baudelaire, namely that “Commerce is natural, therefore shameful.” What if someone said this about medicine or science in general? Think about it!

Tibor Machan is co-author, with James E. Chesher, of The Business of Commerce; Examining an Honorable Profession (Stanford, CA: Hoover Institution Press, 2000).

Column on Wealth vs. Job Creation?

Wealth versus Job Creation?

Tibor R. Machan

“When you’re president, as opposed to the head of a private equity firm, your job is not simply to maximize profits,” said president Obama recently. He added, “Your job is to figure out how everybody in the country has a fair shot. Your job is to think about those workers who get laid off, and how do we pay for their re-training?” Obama continued: “My job is to take into account everybody, not just some. My job is to make sure that the country is growing not just now, but 10 years from now, 20 years from now.”

To begin with it is not the job of the president of the United States of manage the country’s economic affairs. His job is to administer a system of public policies aimed at protecting everyone’s rights as a citizen. That means everyone’s rights to life, liberty, and pursuit of happiness or, in short, the liberty of all. Not the welfare or employment or happiness of all but everyone’s right to pursue these values. Just like the cop on the beat, the task isn’t to get everyone to where he or she is going but to secure everyone’s liberty to go wherever he or she wants to go, including, if that’s how the citizenry chooses, staying put. (Freedom has no particular goal; it has to do with making it possible for citizens to choose their goals, so long as these are peaceful ones.)

But there is also Mr. Obama’s colossal ignorance of economics: jobs are created when wealth is spent! So, when some firm, be it a ma and pa grocery story or a massive equity corporation, makes profits, those who own the profits, the wealth Mr. Obama so callously demeans, then proceed to spend on various goods and services they wish to have. No one just wants wealth–a bunch of resources sitting in a bank or wherever. The wealth is supposed to serve as a means to obtain one’s children’s healthcare, education, the family’s vacation, recreational facilities, etc., etc. And all of this is produced by people with jobs. Without the wealth, the jobs dry up.

So when capitalist institutions enable those who earn profits with their efforts, they are as close to creating jobs as anyone can possibly get.

How else does Mr. Obama imagine jobs are created? By taxing the citizenry and taking the funds so taken and investing them in public works projects? But that’s shooting in the dark–how would those in government know which projects will generate bona fide instead of sham jobs? One major element of a free market economy is that it is the sphere where people spend the profits they have earned through the purchase to stocks, through investing in successful enterprises, spending from which jobs are created.

It is indeed wealth that creates jobs, what else would? From the tiniest expenditure of a child who is spending a miniscule allowance to a humongous bonus earned by an executive who steered a firm toward immense profits, it is such wealth that leads to the creation of jobs. When the wealth is spent, entrepreneurs figure out what it is that those who spend it want to purchase and proceed to support enterprises that produce this. That is how employment comes about, not from fanciful government projects which may or may not fulfill the wants and needs to people who go shopping.

Once again we witness Mr. Obama attempting to discredit the free market place and replace it with government managed “economic” policies. Shame on him and let’s hope his ruse is noticed by those considering sending him back to the White House.

Machan’s Archives: Did ’96 Bill Force People to Work?

Machan’s Archives: Did ’96 Bill Force People to Work?

Tibor R. Machan

As The New York Times would put it, when in 1996 “President Bill Clinton delivered on his pledge to ‘end welfare as we know it’…he signed into law a bill forcing recipients to work and imposing a five-year limit on cash assistance.” Back then this supposedly cruel deed was one “Hillary Rodham Clinton supported.” The Times says that “some accused the Clintons of throwing vulnerable families to the winds in pursuit of centrist votes as Mr. Clinton headed into the final stages of his re-election campaign.”

Now just consider the way The Times words all this. By ending parts of the welfare state, the bill amounted to “forcing recipients to work, etc.” That is like claiming that when one no longer provides support to certain people who become accustomed to getting it, one is “forcing them to fend for themselves.” In fact, of course, it was the government that was forcing all those it taxes to support the recipients in the first place and with the bill in 1996 it finally lessened the load on them. Taxation is what amounts to deploying force against people. Welfare is a form of coercive support. But support should never be coerced but provided only voluntarily by fellow citizens to those who are in need of it.

But for The New York Times–and this is in a news report, not an editorial opinion–withdrawing some of this forced transfer counts as forcing people to work! But nothing forces anyone to work other than the fact that one needs to earn a living, needs to feed and clothe oneself. It is, to put it bluntly, reality that applies the force. It wasn’t Bill Clinton, Congress, or the supportive First Lady.

Here is a good case of journalistic bias which is disguised within a so called straight news report. By wording the “report” as The New York Times did, the newspaper’s editors and writers tried to make it appear that those who aimed for the contraction of the massive welfare system were perpetrating some kind of oppressive action against welfare recipients. But just isn’t so.

In the welfare system it is politicians and bureaucrats who are forcibly confiscating funds from citizens, by means of taxation, in behalf of prospective welfare recipients. It may well be true that these welfare recipients are in need of help but what they ought to do is solicit the help, not take part in extorting it, from other people. It is not charity or generosity when government agents zoom down upon us every year on April 15th or so, and forcibly take from us what is no one else’s resource but our own. If we decide to send some of these resources to needy people, that’s charity, that’s generosity, that’s kindness. But if Congress and the President of the United States hand over the loot they have taken, to welfare recipients, that’s something entirely different–forcible confiscation and redistribution, that what.

Some people tend to think of Robin Hood when they consider the nature of the welfare state but they are mistaken in doing so. What Robin Hood did was to retake resources confiscated in taxes from those who took them and return these to the victims. That part of the legend is rarely acknowledged.

Thus, the government is anything but akin to Robin Hood, quite the opposite–it is the culprit or villain in the legend.

This is something The New York Times might have reported instead of insisting on making it appear that in 1996 Bill Clinton & Co., including the supportive Hillary Rodham Clinton, set out to oppress welfare recipients. Granted, the entire policy may have been a scam to gain Bill Clinton support from American voters who believed that the welfare state needs to be cut back, perhaps even abolished. Given Mrs. Clinton’s belief in “a commander-in-chief of the economy,” I have little doubt that she has no principled objection to such a state and is probably bent on expanding it now that she believes most Americans no longer find much wrong with coercive wealth redistribution.

What The Times ought to have done is gone on record, on the editorial page, arguing that such coercive redistribution is just fine so far as it is concerned, not try to hoodwink readers in a news story into thinking that the force is applied by those who want to cut back welfare rather than those who support it.

A Short Note on the Facebook Mess

A very Short Note on the Facebook Mess

Tibor R. Machan

Why is this Facebook stuff everyone’s concern? Looks like the marketplace is working here just as it should, quite unpredictably, with unknown winners and losers on the horizon.

Is investing now supposed to be a sure thing? Incredible. Investing means taking risks since what one is banking on is other people’s upcoming, yet unknown decisions and that’s naturally uncertain.

All this pining for a sure thing just gives the politicians an excuse to butt in (even though they have no guarantees to offer either).

Seattle, America’s Europe

Seattle, America’s Europe?

Tibor R. Machan

On a recent trip to Seattle, which I visit on and off quite a lot, I found the place to have just the kind of feel I have experienced in Stockholm and Oslo and in cities, big and small, throughout Austria and Switzerland.

The main places in the city are very clean, with a lot of public facilities spic-and-span that few in fact seem to use. It is the kind of place that appears to be ruled by people with taste and class, at the expense of everyone who lives there as well as outside the central regions. And of course green rules, except that the city seems to have a greater percentage of cigarette smokers than any other I have visited recently, including New York City, Chicago, Las Vegas and even New Orleans. (Maybe it has to do with how a good smoke goes hand and hand with a fine, dark cup of coffee, such as is sold in zillions of Seattle’s coffee shops.)

It is not unlike Switzerland and many other places throughout Europe, where the trains run exactly on time but are not actually occupied very much now (since people seem to prefer using private cars on roadways they know they can leave when it suits them so as to take minor or major detours, do a bit of shopping, visit grandma, etc., that cannot be done while using public transportation).

It doesn’t appear that there is much fuss about being taxed to fund all the public facilities, apart from the broad concerns about governments going broke everywhere, borrowing billions from future generations the members of which aren’t casting votes about how the money they will be forced to give up is spent.

I was especially struck by how similar the towns look, on the way to or from the airport on the train route, to ones in such places as Hamburg and Amsterdam. (I rode the train at about 7 AM on a weekday and there were no passengers to speak up along for the ride.) Of course, I was looking at the homes and commercial facilities from the outside and do not have detailed data on what the various places of residence and business look like inside. (Often some areas that look run down to casual observers turn out to be extremely well kept on the inside, something I discovered on a visit to various Chicago suburbs a while ago.)

Anyone familiar with the phenomenon of the tragedy of the commons will very likely realize how it is evident throughout some of the most attractive places around the world–Santiago, Chile; Copenhagen, Denmark; Oslo, Norway and the rest. Because governments can always float bonds and finance the projects of their leaders with debt and money printed for them, there is rank and massive profligacy afoot in these places. Another reason this can go on is that in certain parts of the country, indeed the world, citizens are quite happy to assume debts they are not ever likely to be called upon to pay back. Shops, restaurants, hotels and such are nicely designed and built as a testimony to the good taste of the planners. Never mind that in time there will have to be some kind of adjustment so that those who come up with the services that make all this feasible can be compensated (so they can feed and clothe themselves). The resources for the time being come from tax revenues and borrowed funds, so few care much about the burdens created, the cost that must in the end be covered by the citizenry. Sure, there are always a few who speak out and protest the profligacy but too often they are regarded as party poopers, spoilers of the fun so many are looking forward to.

The fact that most of the expenditures are carried out on the backs of millions who do not live in the places that are being spiffied up so nicely, people who work in rural areas–in plants and factories, on docks and farms and other areas where the hard work that earns some real funds is being done–doesn’t bother the ambitious planners in whose minds these beautiful downtowns around the world, including in Seattle and other parts the beautiful people like so very much live, are conceived.

The dreamers basically think, “These are such nice ideas that it would be a shame not to make a try at implementing them, never mind the ultimate cost to millions who have to give up their own plans in consequence.” It is all in support of our communities, after all, right? And elites know best what is worth being built, right, never mind who must pay in the end, right? (Kind of like in contemporary Red China where so much of what is being displayed is aimed for the foreign visitor, mostly at the expense of the millions living rather poorly in the hinterlands.)