Posts tagged with: business

On October 21st at Acton’s 20th Anniversary Dinner, Richard M. DeVos – Co-Founder of Amway Corporation with his friend Jay Van Andel – was presented with the 2010 Faith and Freedom Award.  Rev. Robert A. Sirico, president and co-founder of the Acton Institute, cited DeVos for his “decades-long exemplary leadership in business, his dedication to the promotion of liberty, his courage in maintaining and defending the free and virtuous society, and his conviction that the roots of liberty and the morally-charged life are to be found in the eternal truths of the Judeo-Christian tradition.”

In his remarks upon accepting the award, DeVos commented on his years in business, the impact that his Christian faith has had on his life, and on the crises faced by the United States in World War II and in the present day.  Portions of his comments are presented below:

An example of the impact that Rich DeVos spoke of at the end of his remarks came earlier in the evening from Nicole Boone, an alumna of Acton’s Toward a Free and Virtuous City conference and Executive Director of Goshen International, an educational ministry in South Africa:

In this week’s Acton Commentary, I take a look at the prospects of “right-to-work” legislation in Michigan, “A Lesson from Michigan: Time to End Crony Unionism.”

One of the things that disturbs me the most about what I call “crony unionism” is the hand-in-glove relationship between the labor unions and big government. We have the same kind of special pleading and rent seeking in this system as we do in crony capitalism, but the labor unions enjoy such special protection that there isn’t even a hint of democratic competition.

The unions get windfalls from government subsidy and turn around and actively campaign for the expansion of government. The partisan character of some of the ad campaigns funded by labor unions are particularly egregious. I’ve recently seen a labor-funded ad running in Michigan that demonizes Republicans and lauds Democrats, and FactCheck.org ran a report earlier this month about attack ads from the American Federation of State, County, and Municipal Employees.

One of the noteworthy thing about unions in America is that the share of union members are increasingly coming from the public sector rather than the private sector. This adds an additional layer of concern to the larger problem of crony unionism. We in effect get government employees using government funds to campaign for the expansion of government.

Labor unions form a vital part of civil society, but when they are turned into arms of the government, their purpose is perverted and corrupted. Professor Charles W. Baird examines the merits of free labor in his Acton monograph, Liberating Labor: Liberating Labor: A Christian Economist’s Case for Voluntary Unionism.

Even the idea of debating whether unions should enjoy monopolistic privileges in a state like Michigan, dominated by organized labor interests for so long, is refreshing. And I think it might just be instructive about the kinds of alternative and innovative proposals that will have traction at the polls this November.

Acton University faculty member Jeffrey Tucker has an insightful essay over at InsideCatholic.com, “Why Catholics Don’t Understand Economics.”

Throughout the piece, Mr. Tucker employs a distinction between scarce, economic goods, and non-scarce, infinitely distributable, spiritual goods:

I have what I think is a new theory about why this situation persists. People who live and work primarily within the Catholic milieu are dealing mainly with goods of an infinite nature. These are goods like salvation, the intercession of saints, prayers of an infinitely replicable nature, texts, images, and songs that constitute non-scarce goods, the nature of which requires no rationing, allocation, and choices regarding their distribution.

None of these goods take up physical space. One can make infinite numbers of copies of them. They can be used without displacing other instances of the good. They do not depreciate with time. Their integrity remains intact no matter how many times they are used. Thus they require no economization. For that reason, there need to be no property norms concerning their use. They need not be priced. There is no problem associated with their rational allocation. They are what economists call “free goods.”

[...] This is completely different from the way things work in the realm of scarce goods. Let’s say that you like my shoes and want them. If you take them from me, I do not have them anymore. If I want them again, I have to take them back from you. There is a zero-sum rivalry between the goods. That means there must be some kind of system for deciding who can own them. It means absolutely nothing to declare that there should be something called socialism for my shoes so that the whole of society can somehow own them. It is factually impossible for this to happen, because shoes are a scarce good. This is why socialism is sheer fantasy, a meaningless dreamland as regards scarce goods

The whole article is worth reading (there is even a good St. Augustine reference)

This week I’m attending Mises University, one of the largest and most rigorous summer courses in the Austrian School of economics (or “reality economics,” as my friend Michael McKay likes to call it).

Among the various lectures, there was one in particular that struck me as particularly relevant to the work of the Acton Institute. Peter Klein, professor of economics at the University of Missouri, delivered a presentation on entrepreneurship, a large part of the focus of his academic work.

Dr. Klein approaches the subject of entrepreneurship from the more realistic Austrian perspective. Rather than viewing people as examples of the homo economicus, as almost robotic, quantitatively-driven machines, Dr. Klein views human beings as unique and free actors. When we act, we do so under conditions of time and uncertainty. Though every human action presupposes cause and effect, there is no guarantee that our instincts are correct or that our efforts will pay off. In this way, every one of us, whenever we choose some action, is a kind of entrepreneur. In the face of uncertainty, we have an intended – but not guaranteed – result of action.

Combine that with the Austrians’ very realist take on production: production is not some kind of abstract graphical function, but the concrete act of taking a natural resource (e.g. some wood, a stone,  some metal ore), and using one’s labor – almost investing a part of oneself – to physically transform it.

In a very broad sense, we all participate in this two-sided entrepreneurial action: actively and consciously transforming the world around us, and doing so in the face of uncertainty and imperfect knowledge.

In a much more specific sense, this activity applies to the people we would usually call entrepreneurs (Ludwig von Mises called them, “entrepreneur-promoters”). These are the businessmen we all know: the small-business owner, the investment banker, the risk-taker. These are individuals whose entrepreneurial spirit in a special way exceeds those of everyone around them. They are the ones willing to take on greater risk, confront greater uncertainty, and make more difficult decisions.

In any case, I find that this realistic description of the role of entrepreneurship fits extremely well with the theology in The Call of the Entrepreneur. In the film, we learn that the entrepreneur is a “co-creator”: He  participates in the act of transforming raw materials and natural resources into products for consumers; but the entrepreneur does so by investing time and energy into the production process. And creativity and imagination play an indispensable role in this process of co-creation.

I remember a kind of feeling of awe when this thought dawned on me during Dr. Klein’s lecture. Here we find yet another example of how the market process, when understood and employed correctly, is not simply a morally indifferent result of choice, but a morally positive thing. Society and its consumers are made better off, and both the laborer and the entrepreneur are reminded of their human dignity as they participate in God’s work of fashioning the world.

Blog author: jballor
Tuesday, February 16, 2010
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NPR’s Morning Edition had a touching piece the other day that illustrated how great a blessing business can be, and just how terrible things can be when there’s no freedom to innovate, produce, and create wealth. Chana Joffe-Walt and Adam Davidson of Planet Money put together the narrative of George Sassine of Haiti and Fernando Capellan of the Dominican Republic, “Island Of Hispaniola Has Two Varied Economies.”

Both men shared the same dream: to open up a T-shirt factory. Sassine has had to struggle through all kinds of adversity in the attempt to realize his dream. And just as it was about to take off for good, to really get going, the earthquake hit. Says Sassine, “I’ve had a coup d’etats. I’ve had hurricanes. Now, I have an earthquake.” The “simple cut-and-sew factory” that Sassine had managed to put together lies in ruins.

Cappellan, on the contrary, started with a simple cut-and-sew operation, but in the interim has enjoyed great success; “His business now is, as they say, several steps up the value chain from the dream he started with.”

Sassine puts his finger on what differentiates him from Cappellan. It’s not ability, or ingenuity, or diligence. What has really prevented Sassine from doing for Haiti what Cappellan has done for the Dominican Republic?

Sassine asserts assuredly of Cappellan, “fortunately, for him, his country, his government was behind him. Me, I’ve been having governments against me all my life.” Political instability, corruption, and tyranny are what kill dreams like Sassine’s and Cappellan’s.

The current issue of Touchstone magazine features an impressive cover essay by Douglas Farrow, Professor of Christian Thought at McGill University in Montreal, Quebec. In “The Audacity of the State,” Farrow uses the biblical Ichabod motif to examine the crumbling pillars of the family and church, which when properly respected form critical foundations for a flourishing society.

In their place, writes Farrow, is the “savior state,” which “presents itself as the people’s guardian, as the guarantor of the citizen’s well-being. The savior state is the paternal state, which not only sees to the security of its territory and the enforcement of its laws but also promises to feed, clothe, house, educate, monitor, medicate, and in general to care for its people.” As Lord Acton said, “There are many things the government can’t do – many good purposes it must renounce. It must leave them to the enterprise of others. It cannot feed the people. It cannot enrich the people. It cannot teach the people. It cannot convert the people.”

In a piece as far-ranging and challenging as this, there are bound to be some minor points with which to quibble. For instance, Farrow’s characterization of the role of Erastianism in the overarching narrative seems to be a bit of a caricature, or at least not contextually sensitive. But in any case, there is one larger lacuna in Farrow’s otherwise admirable, impressive, and worthwhile essay, a piece which has far too many worthwhile sections and quotes from which to pull an adequate nosegay. Farrow’s piece must be read in its entirety. (And while you are there, sign up to receive Touchstone.)

But in discussing the elements of civil society, those institutions other than the state which provide it with limits and humble its would-be soteriological ambitions, Farrow considers only the church and the family, “the two most prominent pillars of political freedom, the pillars that have always provided for a roof or shield over the individual and his conscience.”

To be sure, there is some historical basis for considering only these three (church, state, family). These are, after all, the so-called “three estates,” orders, or institutions of classical Christian social thought. These estates have in some form or another functioned vibrantly in the discussion of Christian social thought from Luther’s own time to the present. Richard Baxter (Weber’s proclaimed paragon of the Protestant ethic), for instance, had a threefold distinction beyond personal ethics: economics (referring in the older sense to family), ecclesiastics, and politics.

But in speaking of the tyrannical habitus of the state, at least passing reference must be made to what Dietrich Bonhoeffer identified as the fourth institution: the realm of work, business, culture. It is understandable why Farrow might not pay much attention to this multifaceted pillar of civil society, especially since that pillar has largely been ground to a nub in the course of the twentieth century. But state control and invasion of this sector of social life is as far-reaching, perhaps more so, as it has been with the state’s involvement in the church and family.

The church and the family certainly have their defenders in the public square, although they are too few and fragmentary, as Farrow rightly laments. But who will speak against the audacity of the state for the realm of labor, work, and cultivation? These need their defenders, too, and that in one sense is precisely what we aim do here at the Acton Institute.

The other day I was tracking down a quotation I heard repeated at a local gathering and came across an interesting book published in 1834. On the title page of the “Googled” Oaths; Their Origin, Nature and History someone had scribbled “full of information… a superior work.” The introductory paragraph reads:

It is well observed by an ancient writer [Hilarius of Arles] that would men allow Christianity to carry its own designs into full effect; were all the world Christians, and were every Christian habitually under the influence of his Religion in principle and in conduct, no place on earth would be found for Oaths; every person would on all occasions, speak the very truth, and would be believed merely for his word’s sake; every promise would be made in good faith and no additional obligation would be required to ensure its performance.”

A few years ago I was asked to help organize a “business ethics conference” for a Catholic diocese. At the end of the day it was in fact a fundraising event, but the cause was good — supporting urban Catholic schools — and everybody knew what we were doing. Former Gonzaga University President Fr. Robert Spitzer was one of the speakers and I’ll never forget his “utility based ethics versus principle based ethics” talk. Enron was the whipping boy of those times and the example made by Fr. Spitzer was rather easy to understand. Enron’s accountants had spent too much time wondering how much they could hide rather than questioning whether hiding was the right thing to do. Lately, we’ve had Barney Frank and his famous “roll the dice” strategy with low income housing loans take Enron’s place, but the Massachusetts Congressman doesn’t seem to be reaching for a scourge. Not for that sin at least.

Speaking of Massachusetts, Harvard University’s Safra Foundation Center for Ethics had an interesting speaker on November 12th. Former New York Governor Eliot Spitzer [no relation -- you can be sure] spoke on the topic “What Should Be the Rationale for Government Participation in the Market?” Since his resignation brought about by a prostitution scandal in March 2008, Mr. Spitzer has been teaching classes in Political Science to the kids at City College in New York and working at his daddy’s real estate firm. Kristin Davis, the former madam who supplied Spitzer’s needs and a reported Harvard alumnus wrote the Center’s Professor Lessig protesting the Spitzer apperance in which she described her former client as “a man without ethics.” The Spitzer appearance at Safra was characterized by some as the start of a “comeback.” We’ll see.

To sort this invitation out it’s probably worthwhile to read Safra Foundation Center’s mission statement:

Widespread ethical lapses of leaders in government, business and other professions prompt demands for more and better moral education. More fundamentally, the increasing complexity of public life – the scale and range of problems and the variety of knowledge required to deal with them – make ethical issues more difficult, even for men and women of good moral character.

But wait there’s more. Under the banner of one of the Center’s niches — Practical Ethics — we find the following:

“The diversity of the various methods and disciplines on which we draw and the range of the social and intellectual purposes we serve are too great to permit an orthodoxy to develop.”

For me, that leads to a version of I’m okay, you’re okay, it’s okay.

On the heels of Spitzer’s Harvard appearance The Wall Street Journal ran a story titled “Networking for Social Responsibility” in which they report on other business ethic efforts at some of the nation’s colleges. Creating an ecumenical balance to Harvard’s Safra Center is Boston College’s Center for Corporate Citizenship organized because “a growing number of companies are turning to business schools these days for help in redefining what it means to be socially responsible.” In North Carolina at yet another college, Gil McWilliam, an executive director at Duke Corporate Education says, “One reason for the heightened interest in social responsibility is that companies seeking to expand globally need to first understand what social issues matter most in their target countries.”

Speaking about expanding globally, several years ago some guys I knew in the real estate business got introduced to some rich Chinese from the mainland. They were looking for investors and opportunities but ran into this cultural roadblock everyone called Guanxi. That doesn’t sound like our word for it, but Guanxi translates as a payoff or bribe. “Everybody does it.” they told me.

Most of these ethics centers have “green” and “eco-friendly” in their brochures and promotional materials. Synonyns in the Thesaurus of social responsibility. But those words sound empty when one hears them from Maureen Kelly, founder of Tart Cosmetics who, during a video interview for The Wall Street Journal tossed them out unsparingly while touting her start up cosmetic company — she uses recycled products because her customers care about global warming — but was unashamed to tell us that her big break came when she lied to a potential customer about an order she had from one of their competitors in order to seal a deal. Maybe she can sign up with the folks at Harvard, or BC or Duke for some remedial work. Or not.

Because that brings us back to where we started — with oaths? How about “the truth and nothing but.”

Samuel Gregg, director of research at the Acton Institute, reflects on business ethics in his recent commentary.  Gregg explores the presence of business ethics courses in business schools; however, with the large presence of business ethics courses we still have a lack of ethics present in business.  The lack of ethics in business became a major factor in our current financial crisis.  Gregg further explains that business is not just about management or the business ethics that are taught, but businessmen and women need to also learn stewardship:

Business, however, is about more than management. It also involves stewardship (inasmuch as managers have moral and fiduciary responsibilities to their clients and investors) and entrepreneurship – the actual creation of wealth. Many business leaders would be shocked to discover that studying entrepreneurship remains optional in many business schools today.

This underlines another problem for some business schools. It’s not clear that all business professors are convinced of the morality of economies based on free enterprise, limited government, and rule of law. This ambivalence cannot help but be communicated to their students, which they take with them into the marketplace. It is very difficult for business schools to teach the moral habits associated with successful business when many business professors regard private enterprise and markets as, at best, useful but morally-insignificant phenomena.

Gregg also makes references it Pope Benedict XVI’s new social encyclical, Caritas in Veritate, to demonstrate the need for morality in business:

Hence, though Benedict speaks approvingly of the rise in ethics-consciousness in the worlds of finance and business, he cautions that simply attaching the label “ethical” to a given enterprise tells us nothing about the actual morality of its practices. What ultimately matters, the Pope affirms, is the precise vision of morality – and therefore the understanding of the human person – informing not simply a particular business, but the entire economy (CV 45).

This morning, the New York Times reported that a broad bipartisan effort of senators convinced Democratic leadership to drop provisions in the Employee Free Choice Act (EFCA) that would have weakened the right of workers to hold secret ballot elections to determine whether or not they would unionize.

EFCA had become known by many of its opponents as the “card check bill” because of its central proposal: if over half of workers at a firm signed cards authorizing a union to represent them, then there would be no federally-supervised election. An election would only happen if over a third of the workers specifically requested it before the card check benchmark was reached.

It is important to look at the different themes of Catholic social teaching regarding labor unions in order to understand the immorality of this suggestion. Pope Leo XIII’s social encyclical Rerum Novarum asserted the rights of workers to form associations in the late 19th century, saying that “to enter into a ‘society’ of this kind is the natural right of man.” Centesimus Annus, a social encyclical from Pope John Paul II, reiterated that the right to unionize exists “because the right of association is a natural right of the human being, which therefore precedes his or her incorporation into political society.” It is the right of free association that gives workers the right to unionize.

Free association among workers cannot be respected under card check schemes. EFCA had the potential to force millions of workers into unions that they did not want. Unions may be correct to argue that some businesses intimidate their workers into opposing collective bargaining, but the unions are guilty of intimidation, too. Unions can also have a direct impact on politics, too, by donating member dues to campaigns and using staff as campaign volunteers. Unions are also exempt from anti-monopoly laws, which allow them to exert far greater influence on the market than any business can.

Actions like these put many labor unions out of touch with Catholic social teaching. Pope Leo XIII warned that unions could seek to abuse their civil power by using it to harm workers and gain excessive power: “There is a good deal of evidence in favor of the opinion that many of these societies are in the hands of secret leaders, and are managed on principles ill-according with Christianity and the public well-being; and that they do their utmost to get within their grasp the whole field of labor, and force working men either to join them or to starve.” It is not unions in and of themselves that Catholic social doctrine supports; it is the right to join one if a worker so desires that is natural and good.

Workers have the right to join labor unions, and many find that it is in their best interests to do so. Many others disagree. Opposition to unionization is not just found in corporate boardrooms. The majority of American workers do not want to unionize. Some do not want their dues going to interests that they oppose. Others want to negotiate with their bosses directly over the compensation they receive. Still others do not want unions to hamper the competitiveness of their employers, as has happened in Detroit in recent years. Only secret ballot elections can determine whether or not workers find unions to be a worthwhile endeavor, no matter how much unions may protest that they do not get exclusive access to workers in order to make their points.

Preserving the right to secret ballot elections is the best way to ensure that all workers have the right to associate according to their own desires. Senators Blanche Lincoln, Mark Pryor, Tom Harkin, and their colleagues should be commended for honoring what Pope Benedict XVI, writing in the social encyclical Caritas in Veritate, calls the “valid distinction between the respective roles and functions of trade unions and politics” that “allows unions to identify civil society as the proper setting for their necessary activity of defending and promoting labor.”

President Obama took time out over the weekend to respond to this week’s PBR question: “Let me assure you in the days ahead my administration intends to do to every industry in this country exactly what we are doing to the automakers.”