The economic ignorance of the Occupy Wall Street crowd and the millions who agree with them doesn’t happen by accident. It happens because many of our so-called intellectual elite keep hammering away at our youth with simplistic messages that profit itself is unclean and that we need more government regulation of private industry to save our collective souls.
An off-campus lecture by University of North Carolina-Chapel Hill communications professor Steve May on March 21 illustrated the direction universities are leading (or misleading) our young (even though the audience at this particular event was entirely senior citizens). It was part of a lecture series called UNC Humanities in Action held off-campus at a local bookstore. The series is intended to spur civic involvement and is sponsored by the UNC Alumni Association and the UNC Program in the Humanities.
The topic was “Ethics and Corporate Social Responsibility.” It may seem surprising that a communications professor’s area of expertise is business ethics, but May has written extensively on the topic. At first, he did not seem too one-sided, as long as he stuck to theoretical aspects of corporate ethics, such as the fact that most ethical dilemmas are a choice between two “goods,” not clear-cut choices between good and bad. He even introduced Milton Friedman’s famous definition of what should be demanded of corporations: “The social responsibility of business is to increase its profits.”
But he eventually made it clear that he did not agree with Friedman. The answer to his talk’s central question, “what are businesses for?” was not to provide goods or services or to create wealth or even “profits,” but rather to serve the “public good.” He suggested that the accepted belief that corporations mainly exist to give stockholders a good return for their money is but a temporary aberration from their more important social function.
May cited the paternalistic company-owned towns of the 19th century as evidence that business’ traditional role has been to provide for the common good. That interpretation seems to be quite a stretch; such enterprises were only a tiny percentage of 19th century businesses. Furthermore, company towns were created mainly to ensure the businesses with adequate supplies of workers in remote locations, not to create Utopian communities. Indeed, such company towns have often been criticized for gouging their workers for life’s basic necessities in order to profit even more from their labor.
Today, the emerging business model is “corporate social responsibility,” which is “trickling in from Europe in pretty significant ways,” according to May. He quoted Irish philosopher Charles Handy to define the phenomenon: “The purpose of business is not to meet a bottom line, is not only to make money, but rather is to benefit the community.”
The real topper was in the question-and-answer period when one member of the audience asked whether “profits are inherently anti-social?”
May’s reply, succinctly, was “Yes.”
Using the media and health care industry as examples, he railed against the “bottom line” as the root of all ethical evils. He missed, or quickly glossed over, the fact that the media has forsaken objective journalism for partisan politics, not that it is too concerned with profits and losses. The real financial story in the media is that many traditional outlets may disappear because they cannot produce a profit in the age of the Internet.
Health care is too important to be left to the private sector, according to May. “How does a for-profit organization manage public health care…when they are legally bound [through the fiduciary responsibility to stockholders] to choose the bottom line over our personal well-being?” he asked.
He seemed unaware, or perhaps unconcerned, that a healthy bottom line permits the health care industry to conduct valuable research, invest in new equipment, and hire or train more and better-qualified workers. Nor was there any mention that the concern for profits forces organizations to allocate resources effectively.
May praised the blurring of lines between for-profit firms and non-profit organizations, and heralded a recent shift in annual reports—as Starbucks has done—from the standard financial report to one that has a “triple bottom line:” “what the company is doing financially, what the company is doing socially, and what the company is doing environmentally.”
He also lauded Johnson & Johnson for giving shareholders the lowest priority in its mission statement. This way of thinking turns ownership on its head: it’s as if the rest of the world has a right to benefit from a corporation’s activities before the owners do.
Of course in many cases, companies write their reports and mission statements and undertake philanthropic or volunteering campaigns primarily for public relations, in order to avoid pressure from the left. May raised that possibility, but made it clear that he favors community pressure on corporations, including the generally irrational and occasionally violent Occupy movement.
To be fair, there are inherent dilemmas in the business function and businessmen do not always behaved honorably. How corporations should conduct themselves ethically is a certainly a worthy subject of study, and May gave a fair account of some facets of the topic.
But his obvious bias dominated. The villains were limited to the favored targets of the left: Enron, Arthur Anderson, Walmart, pharmaceutical companies, and of course, Wall Street. Curiously absent was any discussion of the most serious ethical dilemma currently infesting the American corporate scene today: the crony capitalism that converts government largesse handed out to failing private companies into campaign donations, as in the Solyndra incident.
He assigned the entire blame for the financial meltdown of 2007-8 to the investment community, failing to mention that the offending firms were largely performing financial damage control in response to an illogical, politically inspired government mandate (the Community Reinvestment Act) that they make unprofitable loans to people who could not pay back their home mortgages.
He further suggested that the 2008 collapse was merely a harbinger of events to come—because of the corporate world’s growing disregard for ethics. What is needed as a foil to the private sector’s excesses, he suggests, are government regulations and greater unionization, the very things choking off large sectors of our economy.
And he again missed the elephant taking up most of the room—the really big threat to our future economy is the massive national debt and unsustainable government spending.
So, if we add it all up, he misses the underlying cause of the current recession, the biggest threat to our future economy, and the most egregious ethical lapse in the last five years. He also demonstrates no understanding of basic economics—that profits that free us from scratching in the dirt for survival so that we may aspire to a higher physical and moral existence. Nor does he seem aware of the obvious failure of collective societies, that more government control does not create a more just and prosperity, but instead impoverishes and corrupts.
Either May is truly blind or he is deliberately misleading his audiences—students and general public alike. Either way, by placing the needs of society over the rights of ownership, he is undermining the common understanding of property rights that is at the heart of our society. The real problem is that there are many more just like him, preaching a collectivist message that inevitably leads to ruin. No wonder so many Americans are confused about how an economy works.