Category: Business and Society

noun_283226_ccIn today’s Acton Commentary, I have some further reflections on the Chan Zuckerberg Initiative. The basic thrust of the piece is to encourage institutional thinking. We should expect that humans are going to institutionalize their goals because humans are natural institution builders, or culture makers.

This is one of the animating concerns behind the forthcoming volume The Church’s Social Responsibility as well. Even if younger generations now are more skeptical about “organized religion,” they will necessarily and eventually codify their views in some institutional form. In the context of religion, this means some understanding of “church,” which may look far different than previous incarnations.

As David Brooks puts it, “Most poverty and suffering — whether in a country, a family or a person — flows from disorganization. A stable social order is an artificial accomplishment, the result of an accumulation of habits, hectoring, moral stricture and physical coercion. Once order is dissolved, it takes hard measures to restore it.”

Of course institutions, being created by flawed human beings, have their flaws, and are prone to corruption of various kinds. So scrutiny of institutional structures as well as individual behavior is necessary. But I further argue that the level of public scrutiny should be commensurate with social power, particularly in economic and political forms. So by all means, let’s worry about what Mark Zuckerberg and Priscilla Chan are going to do with $50 billion. But let’s worry that much more about what the federal government does with that amount of money in a work week.

Let’s talk about The Force Awakens, which is tracking to smash global revenue records as it passes $1.5 billion. But let’s also not forget that the federal government spends a billion dollars in less time than it takes to sit down for a screening of the latest Star Wars episode!

CZI LetterOver at Think Christian, I take a look at the Chan Zuckerberg Initiative and derive a lesson from Jesus’ interaction with the rich young man in Mark 10.

A basic lesson we can take from the decision to organize the initiative as an LLC rather than a traditional non-profit corporation is that pursuing social good is possible in a wide variety of institutional forms. A for-profit incorporation doesn’t preclude a main, or even primary, purpose aimed at social good. Just as non-profit status doesn’t by itself guarantee charitable effectiveness, for-profit incorporation doesn’t by itself indicate egoistic or self-centered goals.

Benedict XVI, in his encyclical letter Caritas in veritate, discussed a hope for “hybrid forms of commercial behaviour to emerge, and hence an attentiveness to ways of civilizing the economy. Charity in truth, in this case, requires that shape and structure be given to those types of economic initiative which, without rejecting profit, aim at a higher goal than the mere logic of the exchange of equivalents, of profit as an end in itself.”

There are, in fact, a wide variety of incorporation options available, including the relatively new L3C, a low-profit form of the LLC. As Zuckerberg puts it, the reason to go with an LLC was that it in their judgment it allows the initiative to “pursue our mission by funding non-profit organizations, making private investments and participating in policy debates — in each case with the goal of generating a positive impact in areas of great need. Any net profits from investments will also be used to advance this mission.”

Some have intimated that Chan and Zuckerberg are being hypocritical and self-serving, and that all this is about ultimately making Facebook more powerful. But if you read the original letter, you can see quite clearly what their intent is. Forms of the word “investment” occur 7 times in the letter. Words like “give,” “charity,” and “philanthropy” are either absent or understated. It was the reportage surrounding the announcement that interpreted the initiative primarily as traditional charity, philanthropy, or altruism.

The point here is that true service of others doesn’t need to be entirely disinterested, as if investing or even giving requires simple abdication of responsibility. In fact, the traditional understanding of self-interest as selfish interest in the self is flawed. Self-interest is better understood as comprising the interests of the self, which can be quite narrow or quite broad.

All this is not to say that the substance of the initiative itself is praiseworthy or condemnable. We’ll need to see a lot more than the rough sketches and outlines that are apparent thus far to make anything more than provisional judgments about the prudence of various projects. But looking at the Chan Zuckerberg Initiative from the perspective of the formal decision to incorporate as an LLC, I think we can find a lesson about creative ways of approaching our attempts to civilize the economy.

Cash RegistersThere’s an intriguing piece in the NYT from last month by Hiroko Tabuchi that explores some of the challenges facing traditional retailers (HT: Sarah Pulliam Bailey), “Stores Suffer From a Shift of Behavior in Buyers.”

Department stores like Macy’s and Kohl’s seem to be losing out on the rebound in consumer spending. “Department stores made up one of just two categories tracked by the Commerce Department where spending declined, the latest in a choppy performance from them this year. Spending at electronics and appliance stores also fell 1.2 percent in July,” writes Tabuchi.

One major explanation offered by Tabuchi’s sources is that this part of a larger paradigm shift in American consumer attitude. “The religion of consumption has proven to be unfulfilling,” says Richard E. Jaffe, a retailing analyst, “The ‘pile it high and watch it fly’ mentality at department stores no longer works.”
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Blog author: dpahman
Thursday, September 24, 2015
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Today at the Library of Law and Liberty, I take a cue from probablist Nassim Nicholas Taleb and call for the commemoration of a National Entrepreneurs Day:

One has been proposed in the U.S. House of Representatives, and probabilist Nassim Taleb has given us a fully developed argument as to why we should have one. I second the motion. In Antifragile, his 2012 book, Taleb confesses that he is “an ingrate toward the man whose overconfidence caused him to open a restaurant and fail, enjoying my nice meal while he is probably eating canned tuna.”

This lack of gratitude is a moral failing of all of us in modern society, says Taleb. Hence his idea:

In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using the exact same logic. . . . For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner)—likewise, there is no such thing as a failed entrepreneur or failed scientific researcher.

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If you want to see what happens when a government fails its basic responsibilities of maintaining law and order, read this fine and saddening piece by Detroit Free Press columnist John Carlisle, “The last days of Detroit’s Chaldean Town.” In it you’ll encounter the fraying of the town’s social architecture built around faith, family, work, and government.

At a conference a few weeks ago I was involved in a discussion about the ‘worst’ jobs we had ever had. Mine was cleaning the meat room at a grocery store run by four Chaldean brothers in an area just a bit further east of Chaldean Town. I worked at a “training wage” for the better part of a year, I think, while in high school. I didn’t mind transferring out to make a bit less bagging groceries.

Joseph Sunde has written a fair bit on how “hard work cultivates character.” Earlier today I was reading through a classic speech by the famed American pastor Russell Conwell, which includes this bit of wisdom: “There is no class of people to be pitied so much as the inexperienced sons and daughters of the rich of our generation.” Conwell’s point was that the rich most often attained wealth by working smarter and harder. But “as a rule the rich men will not let their sons do the very thing that made them great,” thereby depriving them of the very same experiences that enabled the creation of wealth in the first place. This is actually as true for the moderately rich as it is for the extremely wealthy. As Michael Novak has put it, “Parents brought up under poverty do not know how to bring up children under affluence.”

So even though I hated that job cleaning the meat room at the Chaldean market, which closed some years later, I was sad to see it go and I’ll always carry those experiences with me and try to pass their lessons along to my own children. The rise and fall of Chaldean Town also has some things to teach us about flourishing at the community level.

calvin-coolidgeThis weekend marks the 143rd birthday of the best president you (probably) don’t know: Calvin Coolidge.

Most presidents are judged by what they do in office. For instance, they are expected to “do something” about the economy even if their actions are counterproductive and detrimental. Coolidge took a different approach: he preferred to do “nothing”—to take as much inaction as possible.

The liberal journalist Walter Lippman once wrote, “There has never been Mr. Coolidge’s equal in the art of deflating interest [in government]” and “the skill with which Mr. Coolidge can apply a wet blanket to an enthusiast is technically marvelous.” (We need a politician like Coolidge today who can lead a new Wet Blanket movement.)

Coolidge did take one notable action, though. He shrunk the government—and the American economy boomed. Is there a lesson to be learned? Award-winning author, historian, and biographer Amity Shlaes thinks so.
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Bridge-building-w-cranesThe state of Michigan is in the midst of something of an infrastructure crisis. We’re consistently ranked as among the states with the worst roads in the nation, something of an embarrassment for what used to be the automotive capital of the US. This infrastructure challenge is also no doubt part of a legacy of a state with one of the more troubled economies in the nation over the previous decade. (In spite of all this, Michigan remains a beautiful state with wonderful people, something Thrillist noted in recently ranking the Mitten state as the best state in America!)

To President Obama’s quip about infrastructure to business leaders, “You didn’t build that,” one might be tempted to retort that, in Michigan at least, that’s also increasingly true for the government. The roads aren’t being maintained in anything like a responsible fashion.

The voters of Michigan recently defeated Proposal 1, which was put forth by the state’s politicians as the only feasible solution. The voters actually saw it for what it was: a game of brinkmanship and blame-shifting. The defeat of Prop 1 put the onus back on the elected politicians to actually do their job and undertake the tough work of governing.

There have been a number of other ideas floated after the end of Prop 1, and part of that overhaul of our state’s approach to infrastructure investment and maintenance includes debate over so-called “prevailing” wage laws that require “union-scale wages and benefits on public construction contracts.”
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