Saturday, April 24, 2010

Corporate Socialism

Tibor R. Machan

The idea that making a profit is somehow ignoble has ancient roots. Partly it stems from the utterly fallacious notion that when someone wins, someone else must lose. So if you go to the mall and purchase a sweater you really like, you must rip off the store where you do this. It is only after modern economics got going full blast that it became clear that when there is a purchase, both sides win. Or at least they understand themselves as having won. You got the sweater, they got the money, you both got a deal!

The myth of the zero-sum exchange, however, continues and politicians and social agitators capitalize on it all the time. So when people in business make profits, the social commentators--advocates of the alleged social responsibility of corporations and business in general--insist they are engaging in illicit exploitation, kind of the way a drug pusher does when selling drugs to a junkie. (Junkies have hardly any will power, so there the idea makes some sense.)

Now this zero-sum idea has been an influential one within the fields of political economy and business ethics. It gives rise to such silly notions as that people doing successful business must "give back to their communities," as if they had stolen their profits. So every time one is part of an exchange one finds satisfactory, one must have made gains illegitimately and needs to atone for it by "giving back".

An entire movement has sprung from these ideas. It is called the corporate social responsibility (CSR) movement. It basically advocates that successful people in business have an obligation to do pro bono work in their communities, to do service free of charge, to settle up with the folks there whom they have ripped off. Never mind that all those folks who supposedly were ripped off actually made good deals as they traded with the businesses that are supposed to owe them! Another name for it is "stakeholder corporate management" in line with which managers of companies aren't supposed to work for the owners and investors and deliver products or services at a good price to costumers so all are pleased with the results. No. Management is supposed to work for the community, for anyone who has his or her hand out for free goodies, for stuff that the business is supposed to pay for, not those to whom the business is providing work on mutually acceptable terms.

So what we have here is the slow but fundamental transformation of a commercial system into a socialist one where profit is demeaned, treated as something evil, and where people must become servants to each other and may not earn a profit from the work they do for others. This isn't supposed to be something to be expected in an emergency--say when there's a flood or earthquake--but the norm, the way businesses are supposed to carry on routinely.

We have here the basic idea that men and women aren't supposed to embark upon good deals through which they can prosper in their lives. No, they are supposed to be part of a huge organism in which everything is shared and no one is ever to be compensated for the work done for someone else. As if everyone were part of one's family or circle of intimates or even a bee hive. That's the central idea behind corporate social responsibility once clearly understood, as well as behind socialism.

And now it is getting worse. CSR might be advocated as a voluntary policy by those running businesses. The same with stakeholder management. Though still destructive of business, at least no one is being forced to serve others. But now in several states across the U.S.A.--among them California, Vermont, Maryland and others--politicians have created, by legislation, "benefit corporations" in which managers may proceed to do pro bono work without having to answer to shareholders whose resources are being used for this.

Normally if managers mis-allocate company resources, they could be sued by the owners for malpractice but with this law they will become immune. The only recourse by shareholders will be to sell their stocks and of course these stocks will have lost a goodly portion of their value given that the company isn't committed to making a profit any longer; nor does the management have to answer to the owners for abandoning this task.

Imagine if one were to hire a doctor to help with one's medical condition and this doctor decided that during the hour one has set aside to go for a visit several nonpaying patients will come to the office and take up the time one needs to get one's medical help. Such a doctor--indeed, any professional who is supposed to do work for clients--would be leaving his or her post, breaching his or her oath of office, which is to fulfill the terms of the contract with clients.

I teach classes at a university and my students can count on me to be there for them, given that they have been accepted by my institution on mutually satisfactory terms. But then imagine that I am told by local politicians and bureaucrats that instead of grading their papers, meeting them during office hours, and teaching them during class time, I must provide service to people in the neighborhood and if I do not, I will be in violation of the law!

We are certainly moseying toward a socialist system in which the decisions of professionals and clients are irrelevant and what matters is what the politicians want from us.

Thursday, April 22, 2010

Skepticism about Government Regulation

Tibor R. Machan

In most eras of human history around the globe people worried about the power of governments, although for a long time little could be done since power was deemed the source of authority. You had power, you got the authority, never mind if you were right, just, fair, or even sensible. Even when finally it dawned on quite a few people that there's no justification for regarding some of us as inherently superior to others, there was still confidence in the idea that some kind of powerful ruler is needed to keep the peace and promote justice. The main figure who tried to come to terms with this is Thomas Hobbes the 17th century English political philosopher and author the famous treatise Leviathan.

Hobbes believed, as most of us do today, that no one is born superior to another, no one has some kind of innate authority to rule other people. However, once we figure out what laws should govern us so we behave peacefully toward our fellows--something we aren't naturally inclined to do but we figure would be a good idea in any case--Hobbes believed a society requires a powerful ruler. In principle this ruler would be selected by the citizenry but once that happened, he or she would have near absolute power. The only warrant for opposing him would be if he became a threat to the lives of the citizenry. (This idea is there in the Declaration of Independence, modified a bit by another English political philosopher, John Locke.) So even though Hobbes believed us all to be equal as far as our virtues and our skills are concerned, he did think that the laws need a very powerful government so as to be enforced. Without it, there would be too many who would try to dodge it and start lording it over the rest.

It needed the input another famous philosopher, Baruch Spinoza, to come to the realization that Hobbes' "solution" to the threat of lawlessness had a major flaw. He didn't think it much of a problem that the absolute ruler might abuse his or her powers. Spinoza figured so much and began to argue for greater and greater dispersion of power among the citizenry and oppose extensive centralization. Spinoza's worries were beginning to be shared by many others and the classical liberal movement was born, with such figures as John Locke, Adam Smith, John Stuart Mill and, more recently, Ludwig von Mises, Ayn Rand, Milton Friedman, F. A. Hayek and Robert Nozick all putting their heads to work on the problem. What they concluded, after their study of human nature and human history, is that the problem of the threat of lawlessness cannot be dealt with by making government all powerful since government poses the greatest such threat.

This lesson is one that seems to need relearning over and over again. In our time, too, there is ample evidence that people share Hobbes' misjudgment when they believe that problems in our society require, first and foremost, extensive and powerful interference by governments. That is just what those who advocate more and more government regulation of business--including of the professionals in the financial community or "Wall Street"--seem to believe. They are followers of Hobbes who think that the government can be trusted to use its immense powers for good, hardly ever for evil.

The American Founders disagreed and their followers still do. I don't know too many Tea Party members personally but it is clear to me that they are far more loyal to the political thought of the American Founders than to that of Thomas Hobbes and, therefore, to President Obama and his team. And while they may not all be on the same exact page about what is or is not the proper role of government, they tend to want to minimize its power, just the way Spinoza, Smith, Locke, Mill and the other classical liberals wanted to.

Indeed, it seems to be common sense to worry about investing government with all the power being advocate for it now by Mr. Obama and Co., since, to put the matter simply, there is no reason to think that those who are the government possess any superior virtue and wisdom compared to the rest of us. And once invested with power, the temptation of governments to misuse it becomes difficult to resist.

As the question goes, "Who is going to regulate the regulators when they engage in truly dangerous misconduct?"

Tuesday, April 20, 2010

Justice and Commercial Crime

Tibor R. Machan

No one in his right mind denies that people in commerce can become criminals. That's because people in any walk of life can--it is a basic human capacity not only to do something wrong but to hurt others with it.

No other known animal is like us in this respect, which is why the courts aren't flooded with cases of animal crime. Despite what all the champions of animal rights and liberation suppose, people are basically different from non-humans. And the source of that difference is free choice. Without it, all human misconduct, malpractice--including Goldman Sach's, Enron's, Bernard Madoff's, etc.--would be but natural disasters, like earthquakes or tsunamis or volcanoes. No one could be deemed guilty of anything at all since personal responsibility would be what many philosophers and social scientists claim it is, a sheer myth.

OK, then, but there is another implication of our difference from fellow critters in the world. This is that one person's or group of people's guilt doesn't imply the guilt of another's. This is why it is wrong to form prejudices based on what people have done who are in some respects similar to a wrongdoer. I am a college professor and if I do something wrong as such, it doesn't show anything about my colleagues. All we may infer from my misconduct is that, well, such misconduct is possible, that others like me might also act badly. But from my acting badly no one is justified in inferring that other professors are also doing so.

And this is a basic principle of justice within liberalism, be it classical or modern. Both type of liberals--be they like Milton Friedman or like John Maynard Keynes--insist that one needs to be convicted as an individual so as to be considered guilty of having done something wrong. And liberals also insist, in the same spirit, that the "sins of the fathers" do not extend to their offspring--your parents may have been racists but it doesn't follow that you are, for example.

Nonetheless modern liberals, unlike classical ones and libertarians, seem to overlook this principle when it comes to people in commerce. So if one Wall Street firm has been found guilty of fraud--which is to say the managers of such a firm have been found guilty of a certain kind of crime--many modern liberals will unhesitatingly rush to condemn other such firms. This is shown clearly by how readily they move from an instance of commercial crime to condemning all those doing the kind of commerce done by the guilty and how they insist that all these others must now be severely regulated even though they have not been found guilty of anything.

This is wrong, and modern liberals should be first in line condemning it, yet they are often first in line showing such prejudice toward all those doing the sort of business done by the ones found guilty of malpractice, like Goldman Sachs, for example.

And this is not the only instance of modern liberal prejudice toward commercial agents. The very institution of government regulation of people in business is flawed--it involves what in other contexts is considered impermissible prior restraint. Just because a business might do something untoward, it is deemed a valid target of prior punishment or imposition of burdens.

In the criminal law this is nearly uniformly resisted and condemned. Just because one might do harm to another--is rumored to be planning such harmful conduct--it doesn't mean one may be imposed upon via some kind of criminal sanctions. Due process requires that the suspect be shown to be guilty, not merely feared to be so.

But vis-a-vis commercial agents the modern liberal tends to carry on very differently. And today this is evident all over, from the highest political office to main street. Since some Wall Street folks have done what is criminal, so now all of them must be treated as if they were criminal as well and restrained, tamed, and regulated.

The injustice of this ought to be, but sadly is not, clear to anyone.

Monday, April 19, 2010

That Terrible "We" Again

Tibor R. Machan

Tony Judt is a constant presence in The New York Review of Books, sometimes with very fine, sensitive essays, sometimes with really annoying screeds. This last is what I found in a recent issue, with the title "Ill Fares the Land" (4/29/2010).

The article, taken from a book he is writing, is mostly a lament about how much lack of equality there is in America. Since I am not at all interested in equality--I cannot fathom anyone other than someone mired in envy worrying about it all the time--I was looking at it mostly with indifference except that from the beginning something about the essay didn't ring right at all. I'll reproduce the very first paragraph so as to illustrate what I am talking about:

"Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self-interest: indeed, this very pursuit now constitutes whatever remains of our sense of collective purpose. We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once agains to pose them."

By Judt's lights all this began in the 1980s. But, I was around then, even before then, and he is not only dead wrong but very confused. Mostly Judt's confusion stems from his indiscriminate, sloppy use of the "we" throughout his essay, just as in these opening sentences.

Just check out what he says above. Who is he talking about? Is it you? It certainly isn't me, nor any of my friends or members of my family, or colleagues. None of my students, either, for over 45 years of college teaching fit the bill. Most people have a whole collage worth of concerns, goals, interests and desires, with just some focused on their material self-interest. (And since when has trying to live decently, preparing to earn an income that can support one's hopes for family and social life, amount to materialism?)

Sure many people I know are concerned with their economic situation, especially over the last couple of years. But who wouldn't be, what with the recent evidence mounting that all the government meddling in the country's commercial life since the early 1900s has produced little else than irresponsible government plans and, recently, endless purchases of homes, massive deficits and debts, and whatever else can go wrong with a macroeconomic system.

None of this is about you and me--any kind of "we"--but about quite specific people, officials in various parts of the federal and state governments, parts where politicians and bureaucrats basically spend other people's resources and take it upon themselves to rearrange the world guided by their own murky utopian vision.

And think of it--the major ideological impetus to all the mismanagement that's been going on has been, you guessed it, egalitarianism. Government has been urged on by the likes of Mr. Judt to make it possible for everyone to own a home, a pretty plush one at that, regardless of whether they had the money to buy it. Instead, everyone was supposed to be able to borrow, at ridiculously low interest rates and with hardly any attention to whether the money lent them is likely to be paid back!

So for a champion of economic equality like Mr. Judt to bellyache about how we are all mired in materialist sentiments is poppycock. And none of it has been selfish, actually, but pure altruism or, rather, redistributionist from start to finish. What is most disturbing to me, however, is how readily Mr. Judt makes use of the "we" in the entire essay, as if he had gone around the country and did serious surveys and found out some basic truth about what motivates us all. But he hasn't done any such thing. He is merely blowing smoke, shooting in the dark, venting to his heart's content. And all of that is made possible by referring to us all at once, collectively, with no evidence at all about what any of us actually believes and wants. Declarations such as "Today's schoolchildren and college students can imagine little else but the search for a lucrative job" go unsupported by any evidence but some vague reference to surveys done in England in 1949! (This, by the way, isn't England, just in case Mr. Judt is geographically quite impoverished!)

This envious, nasty, and sloppy screed, thrust at us with all the anger of an evangelical minister waiving his finger and lamenting our sinning, might be set aright if there were but a bit of concern for facts, for what individuals actually believe and want, instead of what Mr. Judt is imagining about everyone. But with all that anger in him about some people doing better than others, how could that ever be achieved by this author?
NYT's Tea Party Coverage

Tibor R. Machan

In the Sunday, April 18, 2010 New York Times article "Doing Fine, but Angry Nonetheless," the author, Kate Zernike, discusses a poll done by The Times and CBS News on Tea Party members. The gist of the findings is that the members are reasonably well off folks, with a higher than average level of education.

The piece has the usual tone when The Times discusses those whose views it despises--snooty, derisive, and uninterested in substance, as if what these people believed was some kind of disease, not worth serious consideration. The piece went into the history of Tea Party members, associating them with 60s conservatism. Like those sociological studies that aim to explain away people's thinking, treating it as an affliction rather than a product of considered judgment, the study put Tea Party members under a microscope.

This is fairly typical of those like the writers at The Times. It reminds me of a movie by Woody Allen, in which a boy fell on his head and temporarily became a conservative, subscribing to National Review and such. It took another fall by the boy to get rid of this problem. No argument, no examination of the merits of the ideas. Instead it is like some kind of virus one catches, not a set of ideas one might actually find intellectually compelling.

Zernike also quotes one Mr. Perlstein, associated with the survey, saying, "It is entirely predictable." He was referring to what the Tea Party folks are thinking, doing, etc. Here is condescension for you! These Tea Party people are like robots, unable to think independently, freely, but instead are perfectly predictable, kind of like the weather and certainly not like we are, here at The Times, who have independent minds and think stuff through. Such people all reach the same conclusions, don't you know, as those at The Times. But the Tea Party people, well they are dumb and cannot.

This is ironic, actually, considering that every time one reads a column by, say, Bob Herbert or Paul Krugman or Frank Rich, one can pretty much predict that the authors are going to be cheerleaders of every Leftist policy, foreign or domestic. The Left just cannot do anything wrong for these columnists. And Obama & Co. are uniformly brilliant except when they fail to spend enough of the taxpayers' money on, for example, Keynesian policies such as stimulus packages. If it amounts to using other people's resources for projects other people cannot have any say about, the team of columnists at The Times will mostly likely endorse it. No, but they are independent thinkers and not at all entirely predictable like members of the Tea Party.

The Times might want to stop this snooty elitism. Ms. Zernike and Mr. Perlstein might consider having a bit more respect for the people whose activities they cover and comment on. Maybe they will stop being so insulting. But it isn't very likely. For the thinking at The Times, such as it is, seems to go this way: Those who disagree with the editors and columnists of The Times have to be wrong, couldn't have anything of merit to contribute to public discourse. So there's no need to argue with them, for example, or test their views for cogency, credibility and truth. No, that would accord those opponents of The Times' views some measure of respect which, of course, we cannot have. (By the way, had The Times found Tea Party members uneducated and poor, you can be sure they would have been dismissed as pedestrian fools whose views again are not worthy of consideration.)

This is actually a ploy employed by hard core leftists since the time of Karl Marx. For Marx his opponents had nothing worthwhile to say because they were caught in a trap of class consciousness. The bourgeoisie just couldn't help supporting capitalism, especially the right to private property, because it was in its economic interest which held it completely captive. So the way to cope was to liquidate these people, with their regressive, reactionary opinions. No need to make the effort to demonstrate that they were wrong about anything. They just couldn't help themselves.

I do not think that many of those championing President Obama's policies can imagine themselves being mistaken about anything and so listening to other than their pals and apologists is a waste of time. It is a historical necessity that the Obama viewpoint will triumph, not a matter of argument and analysis. What opponents say is, well, all entirely predictable.

Sunday, April 18, 2010

Thanking Mr. Obama?

Tibor R. Machan

Sometimes even my best friends think I am over the top, as when I claim that the Obama Administration is out and out reactionary. How could that be so with a group of people who proudly call themselves progressive? Surely I am engaging in hyperbole. Surely this has to be pure polemics.

Now reactionary means taking public policy backward, to a time significantly different from ours, to a time when principles were deployed that oppose the ones on which the country was founded. That's being reactionary. So what would such principles be?

For one, they would involve treating the government as the ruler of the realm, even as the owner of everything of value in the society, including the people. This is what kings did--they ruled and owned and sometimes carried out policies that benefited their subjects. In fact, the whole monarchical era had this narrative--only a monarchy can be the proper caretaker of the people. That is why it requires immense powers and resources, to the point where the people are deprived, disarmed, and subjugated so that the rulers can do their glorious job.

When President Obama recently admonished members of the Tea Party, urging that they show him gratitude, that they thank him, he demonstrated quite unambiguously his adherence to the doctrine of statism, one that includes monarchism, czarism, Caesarism, and all varieties of top down regimentation of human communities. I won't discuss whether what President Obama supports for public policy amounts to lowering taxes, as he claims it does. Let me just focus on his claim that his lowering taxes is something for which he ought to be thanked?

Sorry, that isn't how it goes in a free society. When the government uses extorted funds, the least it must do to remain somewhat professional is not to squander it, to remain within budget. To represent the citizenry properly, the government must not go over budget and must spend the least amount it can. This is its calling, to say the least!

If my dentist works hard to fix my teeth, I may say "thanks" as a kind of formality but, in fact, that's my dentist's job. That's what I hired the dentist for and that is what he is being paid for. The "thank you" is but a possibly very sincere but merely polite gesture, no more. The same goes for any other professional who works for any client. Keeping within budget is elementary, Dr. Watson.

For the president of the United States of American to even mention that the citizenry ought to be grateful to him for not squandering their resources is gross! How dare he? Is he like a monarch who owns everything in the country and whenever anyone is gaining anything at all from some policy of his, it must be something he has done for them!

I am not even talking about the fact that ultimately, properly understood, taxation is a form of extortion. And when less than what could be is extorted from folks, they owe no one any thanks. That's what should be the norm!

Instead our president seems to believe that doing his job--at least nearly properly by being frugal--is something for which he is owed special thanks! How dare he? Does he believe he is our king so that when he returns to us what he extorted from us, we must thank him? But it isn't anything he gave us! Can't he grasp this elementary fact of a relatively free country? He works for us and with as few expenses as possible. And when this is accomplished by him, no one needs to thank him. It's his job, for crying out loud.

But it seems like President Obama considers it a favor to the citizenry to "save" them a few bucks, if indeed that is what he did, which frankly is widely doubted.

It is time for Americans to fully appreciate the meaning of the revolution that established their country: it amounted to the abolition of statism, the demotion of the king and all of his minions. They aren't in charge anymore. They don't rule! We do.