Category: Business and Society

Over the years, Acton commentators have had reason to criticize religious groups that try to influence corporate policy through shareholder resolutions and similar activities. The criticism has revolved around two points. One, Christian shareholder activism has often focused on issues that are matters of prudential application of moral teaching (e.g., environmental practices) rather than non-negotiable moral evils (e.g., abortion). Two, such activism often seems to imply, if not explicitly proclaim, that the normal operation of business is not adequately “good,” and that business must promote a series of programs extrinsic to its enterprise in order to prove its commitment to the common good.

But there may be a valid sort of shareholder activism, which does focus on non-negotiable moral evils. This kind of activism, far from obstructing the profitable operation of a beneficial enterprise, challenges businesses to practice trade in ways that promote rather than detract from the building of a healthy moral culture. Companies that provide or promote abortion or pornography, for example, while furnishing legally permissible services to customers, are not satisfying “genuine human needs” (see Robert Kennedy, The Good That Business Does). It is reasonable for Christians to exhort such businesses to shift from the provision of harmful products to the provision of “goods,” in the full sense of the term. That seems to be the motivation behind this recent press release, for example.

From the UK:

I never for a moment thought that a life could be decided by something as arbitrary as one’s address.

The often-maligned US health care system is by no means a free market for health care services; rather, it is more of a hybrid public/private system. It’s imperfect and in need of reform, to be sure. But heaven help us if that reform takes the form of a governmental takeover of the entire system. How such a “reform” would improve our flawed system is beyond me.

Next Monday will be the sixtieth anniversary of Luigi Einaudi’s inauguration as Italian President. Einaudi (1874-1961) was a distinguished economist and defender of classical liberalism. In the immediate period following World War II, he was governor of the Bank of Italy and finance minister. Many credit his policy of low taxes and dismantling tariffs with having laid the foundation for Italy’s “miracolo economico” of the 1950s and 1960s.

However, while his role as president between 1948-55 is still remembered, his legacy of economic freedom as a key to Italian post-war development has largely been forgotten. In a recent article, the Milanese financial newspaper Il Sole 24 Ore lamented that currently there is no political force in the country which feels inspired by Einaudi’s actions and insights.

The center-right led by Silvio Berlusconi which won the recent general elections in April cannot be considered a catalyst for market reforms. Its new economy minister Giulio Tremonti has expressed hostility to free trade and blames most of the world’s economic problems on an ideology he calls “marketism”. At the same time, the Northern League, Berlusconi’s junior coalition partner, is impossible to categorize in terms of its economic policy. It demands decentralization and reducing the role of the Italian state but also advocates protectionism.

Neither can Einaudi’s heirs be found on the Italian center-left. The recently founded Democratic Party (PD) has its origins in communism. One can appreciate its transformation towards more moderate positions and a certain openness to economic liberalization. However, the transition is not complete and cannot be compared to the process initiated by Tony Blair in the UK Labour Party in the 1990s.

It is regrettable that nobody wishes to emulate Einaudi’s achievements. These go beyond the technical mastery and application of market economics. Einaudi’s understanding of freedom also led him to insights of more wide-ranging importance for Italian society. He believed that an excess of state power tends to make citizens more lazy in the way they live their lives and think of their responsibility towards others. This attitude leads them to tolerate the social ills around them. They view the poor state of public services as inevitable and accept corruption and rent-seeking as unchangeable phenomena.

Now, that so many people in Italy worry about the economic situation of the country and feel alienated from the political institutions and their lack of accountability, one might think that the time is ripe to return to Einaudi’s lessons.

The story of the Deutsche Bank building following the NYC 9/11 attacks is a study in bureaucratic incompetence…but more importantly it’s an ongoing experience in human tragedy and loss.

There’s a great deal to sort out. This piece, “The tombstone at Ground Zero,” does a good job introducing the issues.

The article begins with an introduction into the fire at the building site in August of last year:

…Thick black smoke was pouring out of the shell of what used to be the Deutsche Bank building. The structure had been badly damaged in the terrorist attack when portions of the collapsing south tower dug a 15-story gash and propelled toxic dust into it. Six years later the bank building was finally being taken down.

The fire quickly spread to 13 floors. The 100 firefighters inside the building couldn’t douse the flames because, as would become clear later, the basement standpipe that should have supplied water to the floors above had been disconnected. The scene was chaotic. Firefighters couldn’t see through the dense smoke and found their retreat blocked by a mazelike series of plywood walls and polyethylene sheeting that made it nearly impossible to locate exits. Panic was audible in the voices on the firefighters’ radios.

Eventually some 275 firemen used ropes to hoist hoses up the scaffolding on the building and tamed the seven-alarm conflagration around 10:30 that night, seven hours after the blaze began. But the struggle to extinguish the flames had cost two lives. Firefighters Robert Beddia, 53, and Joseph Graffagnino, 33, were found lying on the 14th floor near a hose line and pronounced dead at a local hospital. The cause: smoke inhalation.

Here’s a picture of the building when it was on fire:

Photo provided by Rev. Benjamin Spalink of City Fellowship Church.

Blog author: mvandermaas
Wednesday, April 30, 2008

Continuing with my posts highlighting just how wonderful things will be here in the United States when the government finally does its job and takes over the healthcare sector of the economy, I’d like to bring your attention once again to the fabulous success story that is the Canadian health care system:

Last year, the Canadian government issued a series of reports to address the outcry over long wait times for critical tests, procedures and surgeries. Over a two year period:
• Wait times for knee replacements dropped from 440 to 307 days.
• Wait times for hip replacements dropped from 351 to 257 days.
• Wait times for cataract surgeries dropped from 311 to 183 days.
• Wait times for MRIs dropped from 120 to 105 days.
• Wait times for CT scans dropped from 81 to 62 days.
• Wait times for bypass surgeries dropped from 49 to 48 days.

Sure, you might have to wait a couple of months for that lifesaving bypass surgery. But remember: it’s free!

Blog author: jballor
Monday, April 28, 2008

One sector of the American public that hasn’t missed out on the government’s purpose for the economic stimulus package is the advertising and marketing industry. Savvy marketers are targeting sales and special offers to the federal rebate checks, which start to go out today.

One sector of the economy especially banking on how people will spend their stimulus rebates is the automobile industry. Here, for instance, is a local car dealer’s ad specifically targeted to the stimulus package:

I’ve seen another major car ad that is currently running nationwide featuring the advice of an economist to a young car buyer. The young buyer is presumably saving a great deal of money on the new car through a special cash back incentive or zero-percent financing or some such other offer. What should the buyer do with all the money he’s saving? Go out and buy something else?

No, says the wise economist. Save it or pay off credit card debt. Of course, the economist doesn’t give the really solid advice, which would be to forgo buying a new car in the first place and taking on all that new debt. Dave Ramsey, a guru of financial stewardship, consistently exposes the lie that financing the purchase of a new car, no matter what the incentives, is a good use of money. As Dave notes, it’s no coincidence that the financing arms of automobile manufacturers are generally among the more profitable aspects of the business.

It’s no surprise that auto sales are often an economic bellwether, since new car payments are typically one of the easiest things to put off in tough times. These are also precisely the kinds of payments that folks facing credit card debt and dwindling savings accounts should be looking to avoid when spending their stimulus rebate.

Blog author: berndbergmann
Thursday, April 24, 2008

In the April 24 edition of the Vatican newspaper L’Osservatore Romano, Ettore Gotti Tedeschi focuses on the origins and lessons of the global financial crisis. In a previous article, Gotti Tedeschi argued that the downturn is an opportunity for Italy to reform its economy and cut down on unnecessary public spending.

He now examines what the crisis means for the state of international finance and draws some unusual but noteworthy conclusions. In his view, the principal answer for improving global financial architecture cannot be provided by more government regulation.

Instead, Gotti Tedeschi interprets the crisis as a wake-up call to return to “other rules – older rules which restore the priorities of the banking profession.” These rules of sound economics have been partly eroded by an excessive lowering of interest rates by central banks, inducing other actors to take excessive risks in their financial operations.

The over-stimulation of markets led bankers and business leaders to abandon the path of solid long-term growth in favor of short-term gain: “Too often managers with a poor sense of responsibility have created the illusion of realizing miraculous growth and profitability.” They abandoned the search for “concrete results and above all, long-term sustainability.” His advice is to return “to what is real, responsible and durable.”

He suggests that what is needed is a spiritual refreshment to deepen the understanding of how a successful bank or business is run. This would enable people to resist temporary financial fashions and evaluate real risks and possible gains adequately.

Gotti Tedeschi is in a good position to combine the practical insights of the world of banking with a profound theoretical grasp of business ethics. While he is one of the most well-known bankers in Italy, he has also found the time to write books about the relationship between Christian values and economics.

His advice deserves to be taken seriously. As politicians around the world propose a whole range of new regulation in response to the credit crunch, it must not be forgotten that public authorities provided the markets with cheap money and excessive stimuli. The result was a widely distorted perception of risk and profitability. It would be unfortunate if a period of over-stimulation was followed by a period of over-regulation.