stat counnnter

Monday, September 16, 2019

I'm back, finally.with a new post on Capitalism

Apologies to my readers for not posting since May. I've been real busy helping family members and some friends who came on hard times and keeping my own house up. But that is easing off now so here is my next post.

 The Detroit Free Press of Aug 25th had an oped by guest columnist Ted Kaufman a former US Senator from Delaware. The headline is "Corporations suddenly say they care about you, be wary."

Lets look at that headline a little closer. Now I know that headlines are often written by editors so I'm not criticizing Mr Kaufman for that. But most businesses do indeed care about the happiness of their customers. They have to care or lose them as customers.

The word 'suddenly' here is a smear word. It implies that businesses usually don't care about you but if they say they do then  it has to be a  'sudden' departure from their normal heartless practices.

This tells me that the article is probably going to be anti-business or anti-profits or leaning that way. First though I want to say that I don't know of any corporations that "suddenly" decide to care about their customers. It's been my experience they're eager to show how much they value their customers from day one.

(As a side note I would say that 'be wary' headline warning is much more appropriate when applied to those in Mr Kaufman's chosen profession: politicians. But I digress.)

What Mr Kaufman wants us to be wary about is:
"A few day ago, the Business Roundtable, the very prestigious organization that consists of the CEOs of nearly 200 major U.S. Corporations, announced their members had agreed on a new definition of "the purpose of a corporation."
He then says cynically:

"It was enough to melt your heart. The CEOs of corporations like Walmart, Amazon and Goldman Sachs had decided their companies should be:" (My comments in brackets MN]
#'Investing is our employees.' [They do that with paychecks and benefits MN]
          #'Dealing fairly and ethically with our suppliers.' [They do that to stay in business   MN]
#'Supporting the communities in which we work." [They do that by opening their doors and hiring workers MN]
#'Generating long-term value for shareholders.' [They do that by focusing on maximizing profits-which Mr Kaufman disdains. MN]"
'Each of our stakeholders is essential,' the statement said.'We commit to deliver value to all of them, for the future success of our companies, communities and our country."
 Sheesh! Sounds like a moral pledge of allegiance is being offered here. But why? Isn't a company opening its doors to provide a community with goods and/or services that will make their lives better, hiring locals to work there, and paying taxes to support the local government, enough of a benefit to the community? Evidently not for Ted Kaufman. His attack is on profit seeking as such.

The tool to be used against the corporations is the concept "stakeholder" an invalid concept designed to smuggle into boardrooms an unearned guilt for the crime of successful production. Mr Kaufman continues:
" Back in 2015, I wrote a column in this newspaper that quoted a 2009 Business Roundtable report called "Company Stakeholder Responsibility." It called for more involvement with what it defined as a corporation's "major stakeholders, a group that went well beyond owners of its stock."
"This is not Milton Friedman's argument that the only social responsibility is to increase profits," the report said, "but rather it is a practical matter--giving money to the opera doesn't make up (in any moral sense) for short-changing customers or communities. How does this company make customers, suppliers, communities, employees, and financiers better off?" [I have already answered this above]

A stakeholder is anyone that has an interest in the business but does not own shares. I have an interest in a lot of business close to my house. Does that qualify me for some of the company's profits? I don't see where. I buy from them because doing so is in my self interest. They take my money because that is their interest. It is a win-win deal. But that is not what Mr Kaufman wants.

He adds:
"The report continues: "Capitalism is a system of social cooperation--a system of working together to create value for each other, value which none of us could create on our own. In this sense, business is already an enterprise with moral ramifications."

It must be noted that this is not Mr Kaufman speaking but rather the CEOs of 200 major corporations who have been cowered into spiting in their own face for the sin of producing values that people are willing to pay for because those values make their lives better in some way.

To compare this practice of mutual trade for mutual benefit to "short-changing customers and communities" is a moral disgrace especially when it's the businessmen agreeing to disgrace themselves. But what idea could have the power to make men take the whip out of the hands of their destroyers and whip themselves?

This is what an unearned guilt will do to anyone naive or cowardly enough to accept it. That is what altruism--other-ism--is all about. Selling guilt then sitting back and collecting penitence.

Truth is, most politicians don't want the penitence for themselves. They want to guilt companies into surrendering more of their profits to the community so they can stand in front of that community and declare "Look what I've done for you, now reelect me (or my party)"

It is almost futile to tell these CEOs to stand up for their right to exist without having to pay ransom money to so-called 'stakeholders' who want more than a fair and free trade. It is futile because the Ted Kaufmans of the world will not give the businessmen any moral credit for their charity to the community.

Aside from the snide remark that the report  "...was enough to melt your heart." He also says:
"How often have you read a story about a major corporation choosing its commitment to the community in which it operates over maximizing profits?"
He later says "To put it bluntly, talk is cheap." I will only add, so is his.
The only commitment a corporation needs to make to its community is to provide a product or service that the people are willing to pay for, which means a mutual trade for mutual benefit.

 I can however, testify to the fact that the corporations Mr Kaufman cites routinely donate a lot of their products and even money to local charities. I've seen such corporations donate hundreds of say hot dogs, burgers, buns, pop and water, bags of potato chips, bags of ice picnics and fund raisers of local charities. It is common practice.

But Mr Kaufman's oped makes no mention of such investments made by corporations in their respective communities. If fact, to read this oped one could easily believe corporations don't do such investing, a serious evasion of the facts and evidence that Mr Kaufman doesn't care how much charity they give. His hatred of profits is all that matters.

To further prove my claim that Mr Kaufman is not a supporter of free trade despite his claims to the contrary , I cite his closing paragraph:
"I'd be hopeful only when we get serious about the "enforcement tools" needed for corporations to really believe they have stakeholders beyond their shareholders. (He was quoting Larry Summers in the Financial Times who also called for "enforcement tools.")

Of course those "enforcement tools" always turn out to be guns, the legalized guns of regulators. So we can see that Mr Kaufman, and Mr Summers, seek forced charity as a government policy. But that is a contradiction in terms. Charity to be moral at all must be volitional, by choice. As Ayn Rand pointed out, the moral is the chosen, not the forced. Forcing charity is what thieves do.

Most troubling for me is the spectacle of capitalism's heroes failing to defend the most moral political system ever devised, free market capitalism. The word sacrifice wasn't mentioned in the oped. But sacrifice, its real meaning: the surrender of values for lesser values or nothing in return, is what his oped is all about. (For more on this see Rand's book 'Capitalism: the Unknown Ideal' still in print.

When businessmen refuse to defend their moral code of rational self interest, when they agree to sacrifice some more of their profits in order to feel moral, Then the game is over. The haters of individual rights have one.

It's only a matter of time till you hear something like "you haven't sacrificed enough. We, in government, who care, must nationalize your business and in that way provide real sustainable social justice." Except it won't.

When capitalism's most productive heroes agree that free trade for mutual benefit is akin to 'short-changing customers and communities, capitalism doesn't need any enemies. It's committing suicide.

I highly recommend Rand's essay "The Obliteration of Capitalism" in her book "Capitalism: the Unknown Ideal"

I've been unable to find a link to Mr Kaufman's oped.