Two Cheers for the Welches

by Tibor R. Machan

In their BusinessWeek column of October 9, 2006, Suzy and Jack Welch make a valiant effort to debunk the stakeholder theory of corporate ethics. This is the view that managers do not owe service first and foremost to shareholders or owners of a company but, rather, to anyone who has an "interest" in the company's activities. The idea has also been dubbed the CSR thesis, whereby the first duty of business managers is their so-called "corporate social responsibility."

The Welches do a fine job of affirming the idea that what company managers ought to be doing is improving the value of the firm for their employers, the stockholders or owners. That is indeed the moral responsibility of corporate managers, even if it is true that other moral concerns do have a place in how they make their decisions. (Just like individuals, who ought to be prudent, which is to say, strive to succeed in their lives, first and foremost, companies ought also to practice such virtues as generosity, charity, and so forth.) But there are some important points the Welches failed to call attention to in this debate.

When the stakeholder theory is made part of law and public policy, it clearly violates the right to freedom of association of managers. They have not chosen to go to work for stakeholders but for stockholders, so forcing them to serve the former is involuntary servitude, plain and simple. Free men and women should not be required to work for anyone other than those whom they have chosen as their employers. (Yes, Virginia, this calls into serious question a good many public policies in our so-called free society!) This element of the CSR or stakeholder theory is never discussed by its promoters, of which there are hundreds teaching in business schools and writing business ethics text books. It is, indeed, professional malpractice to fail to address the issue.

Yet there is something the Welches might also have discussed, albeit briefly, namely, how so many company managers act unethically by getting into bed with government. Whenever companies jockey to gain subsidies, special favors like protectionist policies, or urge government to bring anti-trust actions against their competitors, they are acting immorally. Their morally defensible position against the CSR and stakeholder advocates becomes weak when they fail to refrain from seeking government favors. (Doing this, by the way, is akin to participants in an athletic race seeking special favorable treatment from referees or judges, only far more serious!)

Unfortunately the idea of going to government for this or that favor is so widespread in society that most corporate managers probably don't even think of it as possibly unethical. I venture to guess that Suzy and Jack Welch are similarly oblivious to how widespread this kind of corporate malpractice is in our midst. Certainly BusinessWeek and other business publications, or other aspects of media covering business, seem to fully accept this kind of bad corporate conduct. After all, people in the sciences, education, arts, and elsewhere indulge in what economists call rent-seeking behavior. Get government to help you rip others off and after taking its own substantial share, transfer the funds to those making the "plea."

If the Welches will not acknowledge these types of misdeeds on the part of entirely too many corporations, their leverage against the unjust critics of corporations will seriously diminish. Their credibility as moral guides will evaporate. And that would be too bad, especially when it comes to their probably widely read insights about CSR and stakeholder theory. These are rotten, nasty ideas, albeit terribly popular among those discussing business ethics these days (too many of them business bashers, in fact). They are a roundabout, dishonest way to smuggle in and gain support for collectivism again.

To deny the right of ownership to individuals is basically to treat them as common property, as if their lives, work and resources may be used against their consent with impunity by anyone. And the Welches' help in resisting this should be much appreciated. So, two cheers for them!

A Most Unreasonable Option

by Tibor R. Machan

Not being an expert in the field of public transportation, I chime in with some trepidation here. However, the issue I wish to discuss is very much in the public domain, being debated by amateurs throughout the community. And since I've done my share of travel around the globe, with all kinds of methods evident in how people deal with congestion, I thought I could add my two cents worth. Especially since one local paper has asserted in no uncertain terms that the most reasonable option for solving the congestion that exists on the Riverside Freeway to Orange County route would be a people-mover such as being used at Disneyland and other amusement parks.

Of course, this option is a joke but those who propose it don't seem to know that. They are those among us who at any cost want to remove the automobile as a part of our lives and force us all to go back to an era where its conveniences would be renounced as too bourgeois and environmentally unfriendly. In the essay where this idea was proposed, the fact that Disneyland and some other amusement parks and recreation (skiing) regions make use of people-movers served as proof of their suitability for moving commuters from Riverside County into Orange County and back, during workdays, instead of some other approach to reducing the congestion on Routes 91, 55 and 57, the current roads linking the two areas.

Now people-movers are fine for those interested in being carted around from one attraction to another at an amusement park, from the parking area to the slopes at a skiing resort, from the parking era to the museum at the new Getty Museum in Los Angeles, and so forth. These places are attended for very specific purposes, for just a little while, after which people go back to their lives of picking up or dropping off their kids at school, little league or ballet, grocery shopping, visiting the mall or the local DMV, grabbing a bite of lunch, etc., and so forth. In other words, most people do their commuting while also taking care of business, which tends to require innumerable stops.

Anyone who believes that folks ought to be regimented into using people-movers hasn't a clue about what most people do while driving their cars to and from work. They do a lot besides getting to work and returning home. Even if the bulk of the driving occurs on reasonably long stretches of freeway or highway, once close to work or home they are very likely to pick up laundry, buy some milk and the like. This cannot be done when using a people mover -- or, it would be rather complicated since all such errands would have to occur right by the points of embarkation. Actually there is an option being considered, namely, a tunnel through the Santa Ana Mountain range, that makes much better sense (given that the alternative of private solutions, based on market forces, is not in the cards hereabouts). I have lived in Switzerland and traveled all around it, as well as Italy, where tunnels for trains and highways are ubiquitous. And they are not only highly efficient, able to accommodate private automobile use as well as public transport, but seem to be fully harmonious with a plush and abundant wilderness.

I am no expert at estimating the respective costs associated with various alternative solutions to the Southern California traffic congestion, one that takes up several hours of commuters' lives every day during which they are caught in massive tie-ups and waste horrendous amounts of gasoline. But it seems to me that the people-mover idea is a deal-breaker from the get-go. Unless one is willing to live in a country that is fully top-down regimented by some technocrats, wherein the agendas of individuals are of no significance at all and only some elite's goals matter, the people-mover idea simply should not be an option. The fact that some people believe that it is bodes badly for a culture in which individual rights and the pursuit of the happiness of these individuals are supposed to be an outstanding factor.

Will Foley Scandal Serve as Lesson?

by Tibor R. Machan

What lesson? I repeat myself by quoting Abraham Lincoln: "No man is good enough to govern another without that other's consent." And so as not to forget this, we have the likes of Mark Foley demonstrating its truth in grossly concrete terms.

The idea that politicians are to be the guardians of our morals -- an idea subscribed to by nearly all political factions throughout human history and certainly by Republicans and Democrats today -- is so off the wall that perhaps only blatant cases such as the Foley scandal can drive it home. Certainly Mark Foley is far from the first politician to illustrate what folly it is to entrust ourselves to the moral guidance of those who aspire to that job by joining the governing classes. We have many examples of crooked politicians, judges, cops and so forth, staring at us from the pages of newspapers across the land. Only the other week it came to light that innumerable small courts in New England have seen their share of systematic injustice. Then there was Rep. Randy "Duke" Cunningham from San Diego but a few months ago. And, of course, in the minds of most Democrats virtually all the Republicans are corrupt, while Republicans tend to think the same of Democrats.

With all the solid evidence and not so solid innuendo, the really major scandal is that the bulk of the public still considers politicians and bureaucrats qualified to enact laws, and the police to enforce them, concerning a great deal of our peaceful -- albeit at times risky and immoral -- behavior. The banning of this, the regulation of that, the criminalization of yet something else -- all of it is being done with the full awareness of the voting public.

Yet the plain and very scary fact is that these people who are drafting these laws and running on their record of having done so, are not being met with guffaws all around but keep getting elected to office!

The situation is bad enough to suggest that perhaps human beings are fundamentally flawed in their judgment and conduct, that their capacity to tell right from wrong is severely lacking. Why else would they keep going back to the politicians for help with their various problems? Why else do they keep up the silly hope that, well, maybe next time FEMA will save New Orleans, that the Federal Communications Commission will clean up filth on in broadcasting, that the Federal Trade Commission will get all commerce to be decent and honest, etc., etc., and so forth?

Ordinarily I don't share the pessimistic outlook about human beings in general, the sort that dominates thinking among environmentalists and people who teach business ethics, for example. And in fact even after a fiasco such as Mark Foley's misconduct that is not only vile on its face but demonstrates rank hypocrisy -- he has been a fervent supporter of governmental "protection" of children from Internet predators -- there is no sound reason to regard all people as innately corrupt, as some in the theological and psychological communities would have it.

Yet surely it ought to be evident to us all that human history, recent and ancient, demonstrates beyond any reasonable doubt that when people attain positions of power -- when they get the legal authority to regiment their fellows from Washington and other centers of officialdom -- they are very, very inclined to go bad.

Yes, this brings to mind yet another famous, oft-repeated quote, namely Lord Acton's about power that tends to corrupt and absolute power that corrupts absolutely! What is quite puzzling is how blind to this fact millions of people are. I have been attributing that blindness to, among other things, the governmental habit. After all, most of human history is mired in some people ruling and conquering and oppressing the rest, by means of sheer violence and its threat. And in most of the world nothing much as changed. So perhaps it is understandable that the alternative of a civilized approach to dealing with human problems, one that eschews coercive force, one that limits government to very minimal functions (like defensive and retaliatory force), doesn't catch on widely.

Still, when one does know just how corrosive the power of some over others is -- even in this so-called free society where it has usually been disguised as required by some emergency or last resort -- it is imperative that the more general point be stressed and such scandals as those involving Mark Foley don't get bogged down in the details of merely titillating sleaze.

America Not So Beautiful

by Tibor R. Machan

As a kid in Budapest I read a bunch of exciting American novelists, including Mark Twain, Zane Grey, Max Brand and others. I also saw some pretty exciting movies before the Soviets marched in a banned them all in 1948. Even afterward we kept trading the books back and forth in our small black market. They helped us counter the really nasty propaganda the Soviets and their Hungarian puppet regime put out against America through the government-controlled press and educational (read: indoctrination) system.

Yes, much of this was lopsided because it was, after all, mostly
fiction and cast the American past in far more favorable light than truth would have it, although Huckleberry Finn and Tom Sawyer
contained some harsh truths about the country. Still, the viciousness of slavery and segregation and the depth of the racism did not come through fully until after I finally ended up on these shores, although by then the process of reparation and reform had been well under way. Also, I spent much time around the military in Germany in which there wasn't the racial divide that became evident to me once I came stateside.

One thing, though, was different back then from what it is now: the basic social-political philosophy associated with America had been pretty clearly and openly individualist, stressing individual
freedom, the free market economy, civil liberties and similar ideals I later learned came from the influence of classical liberalism. Of ourse, when I arrived, in the late 50s, the welfare state had become ubiquitous and both the Democrats and Republicans had gotten on board with it -- FDR, after all, had mesmerized much of the country with his utopian, anti-libertarian fantasies and promises as well as the corrupt charge that the Great Depression was the fault of individualism and economic laissez-faire.

Still, much of the language of politics, even in the era of Eisenhower, honored the ideals and ideas of the Founders, as sketched in the Declaration of Independence, whatever was the actual, messy socio-political reality throughout the country. And in time, with the national candidacies of Barry Goldwater and Ronald Reagan, these ideas received a bit of rhetorical run for their money, so that most citizens were reminded of what it was that made their country really different from the rest of the world, especially from regions controlled by the Soviets.

The fall of the Soviet empire was quite an encouraging development to those like me who had come to realize that human beings are treated most justly and are best off when they have their basic rights to life, liberty and pursuit of happiness respected and legally protected. I turned my attention to these matters very early in my academic career and tried seriously to do a thorough comparative assessment as between laws and public policies that were loyal to the Founders' vision and those that guided people toward one or another form of statism. Although I never believed there must be progress for the better in human history, the demolition of the Berlin Wall was very encouraging.

Unfortunately, by that time there wasn't much intellectual, academic commitment to classical liberalism, if indeed there ever has been, in the centers of learning, so the newly liberated countries received bad leadership and only here and there were they urged to embrace the principles of a fully free society. As far as America's leadership in these matters was concerned, it had long been abandoned and the two active political parties focused mainly on just how much of a welfare state -- with a focus on government controlling which parts of our lives -- should public policy promote.

It seemed, in fact, that the demise of socialism in practice energized the hordes of the faithful in the American academy to come up with all sorts of more or less reconstituted clones of the statist system. In Europe the gutless "third way" became the intellectual and political rallying vision, while America got bogged down in panic about the environment, guilt about the past, and so called wars on poverty, drugs, and terror. Freedom got scant attention! The vision of a fully free society -- resting on the idea that adult human beings must take responsibility for their lives and solve their numerous problems in civilized, non-coercive ways -- got buried in all the muck of reactionary trust in government. It was as if the country regretted rejecting the monarchy it so boldly tossed aside in 1776, and wished once again for a king -- or at least Nanny or protectionist state.

None of this needs to spell doom. People rid themselves of bad habits with great difficulty and the governmental habit is the worst; it can take decades, even centuries to overcome. One can only hope that the next generation and those following it will manage to recover the ideals and ideas of the Founders despite how the bulk of the intellectuals and academics, not to mention politicians and bureaucrats, have demeaned them.

The Times's Leftist Blindness

by Tibor R. Machan

In The NY Times Sunday Magazine, October 1st, the Profile feature,
"Questions for," is devoted to Warren Beatty on the occasion of a
revival of his 1981 movie Reds -- one that recounts the journalist
John Reed's love affair with Soviet communism -- for which he
received the Academy Award as the director. I have seen the thing
once, I believe, and it just goes on endlessly casting the beginnings of the murderous era of the Soviet Union in pretty favorable light. (As an antidote, one ought to read or see the movie of Ayn Rand's novel, We the Living! Even Reds acknowledges in the last analysis, though, that the Bolsheviks were up to no good.)

Now there is nothing all that much new about this. The New York Times has always favored the Left, however rotten it has been demonstrated to be over the decades. Even in our times, it tends to side with the Leftists in the Middle East, never mind that their latest heroes violate nearly all the egalitarian ideals The Times has been championing over the decades, such as equal rights for women, due process, gay rights, etc.! I suppose those who hate George W. Bush enough will gain the support of The Times and other Leftists no matter how bloody their hands. (Just take a look at The London Review of Books and see how they bend over backwards to rationalize every evil perpetrated by violent Muslims, never mind how these people stand against everything that's part of the liberal ethos.)

Beatty produced, directed and starred in Reds and this movie is loved by all those who supported Lenin and Stalin and the rest of those Bolshevik thugs because it makes all the supporters out to be idealists, naively hoping that this time a massive tyranny is going to end up righting all the wrongs of the world. That this can still receive approval from American Leftists just goes to show that 20 million deaths at the hands of reds isn't enough to dissuade the enthusiasts.

The late Susan Sontag was right for a while when she shocked her
fellow Leftists by saying that communism is successful Fascism. She said this, of course, several years before the Soviet system finally bit the dust, an event that showed that neither communism nor Fascism manages to be very successful at anything more than causing death and misery for millions. Still, if there were a movie made called, say, "Blacks," honoring the idealistic Nazis and Fascist black shirts, we would not see many sentimental remembrances to its creator in The New York Times Magazine.

Somehow these people still suffer from that macabre illusion that one tyranny can be more honorable than the other, what I call the Victor Navasky (of The Nation) thesis (advanced in his book Naming Names). Even after it has been shown that between the Red Soviets and the Red Chinese the toll of communism has been more than double that of Nazism, these Leftist sentimentalists just will not accept how destructive their vision has been, how much horror they have helped unleash in their blind championing of the "ideals" of the reds.

This, by the way, is what is also happening at high schools, colleges and universities across the land, with all those sophisticated Leftist professors treating the reds with kid gloves compared to how they, rightly, treat the Nazis as vicious murders. The crimes of the Right are, to them, unforgivable but those of the Left get cast in understanding terms (the struggle for the poor can lead to mistakes, etc., etc.).

With this sort of scenario on our intellectual landscape, it is
difficult to be properly upset with George W. Bush and his nearly
total abandonment of the libertarian inclinations in the American
conservative movement. Yes, Bush is a traitor to the ideals of the
American Declaration, what with his total rejection of Ben Franklin's insight that "Those who would sacrifice liberty for security deserve neither." But compared to the blindness of the Left, with its ongoing failure to acknowledge how evil communism was and how culpably naïve are the likes of Warren Beatty when they romanticize the commies in vehicles such as Reds, Bush is somewhat tolerable.