Wednesday, November 23, 2011

Doing Business is What Allows for Doing Good!

By Rich Kozlovich

This first appeared on May 30th, 2010. It has been hit a lot lately and with all of this hoopla about these insane OWS people in the news....with prominent people defending them.... I thought this might be worth running again with some changes.  RK

Over the years I have been linking articles to Green Notes (a weekly newsletter I used to send. RK) that dealt with the concept of Corporate Social Responsibility (CSR). In 2006 Steve Forbes wrote an article dealing with an investment concept promoted by Steve Milloy entitled, Pressuring Business to Believe in Business which is worth reading. 

Somehow we have developed a social paradigm that says we have an obligation to “give back” something to society, to the community, or to some cause or other because we have been so blessed; as a result we have been made to feel that we must be grateful to society for any successes we may have enjoyed. Apparently it wasn't all of our hard work and dedication that created that success, so therefore we should want others to receive the benefits of our success, whether they contributed to it or not.

First of all, volunteering for various causes or community activities is rampant in the United States, and this has always been so. Why? There are a great many emotional reasons given as to why Americans are so generous with their time and money; all true mind you; but they are only secondary reasons. Everyone seems to keep missing the primary reason. We have the time and money because we are so financially successful. And we are so financially successful because in the U.S. business is allowed to do business. It is doing business that allows for so many to profit so much that they have the money, time and freedom to spread their largesse as far as they like; and to whatever cause they wish to spread it.

But first we have to understand the difference between doing business and doing good.

Forbes makes this point. “Just think of the phrase "giving back." The implication is that entrepreneurs or companies took what wasn't rightfully theirs and that they will make up for their business sins by giving their ill-gotten gains to worthy causes. Commerce and philanthropy are seen as polar opposites. The opposite is the truth: Commerce and philanthropy are two sides of the same coin. You don't succeed in business in a free society unless you meet the needs and wants of other people. As for "self-interest," it is actually a positive thing that people pursue their ambitions lawfully and develop their innate talents to the fullest. Commerce directs these energies in positive directions. The virtue of democratic capitalism is that one person's gain is also society's gain. Economics is not a zero-sum game as was once thought, though in many intellectual and political circles today it is still regarded as such. In actuality, businesses and entrepreneurs create incomprehensible, complex webs of cooperation that are all geared toward improving our lives.”
A lady at one of my accounts was thrilled with the idea that the “rich” were going to be taxed heavily under this new administration because it was time for them to “give back”. I said that they have always given back and in point of fact they give back constantly. She laughed and said, 'yeah, right"! I went on to explain. They give all the jobs, which means they pay 100% of all the taxes collected. How? Payroll taxes, sales taxes, etc. are collected from people who get their money from the rich. On a personal level they also pay almost all the income tax collected by the federal government. The top 5% pays approximately 58.7 percent of federal individual income taxes and the top 10% pays over 70% of all federal income taxes. The top 50% pays over 97% of all federal income taxes. That means that 40% of the top 50% only pays 23% of federal income taxes. As for the bottom 50%...what do they pay? They pay a whopping 2.3%, and since about 47% or more of the population actually pay no federal income tax at all. That means that 3% or less of the 50% pay that 2.3%.

When a man builds a $5,000,000 home he is giving back to the community. He doesn’t drive any nails. He doesn’t lay any cement block or cement floors. He doesn’t hang the dry wall, or run the electricity. He hires people to do that; to the tune of $5,000,000. And there are no strings attached except that these people have to perform. And there is no government middleman taking a huge chunk of that $5,000,000.

And after that do you know what this rich person did? He filled it with carpeting! Carpeting which someone had to manufacture, someone had to sell, someone had to ship, someone had to sell again and then finally someone had to lay the carpeting. Then he bought furniture to fill the house! Again, furniture someone had to manufacture, sell, transport, sell again and deliver. I don’t know how many have been to a $5,000,000 house, but the landscaping is done by professionals and there is usually a housekeeper. And I and my friends in the pest control business do the pest control at all of them; all of us collecting salaries he generates.

He not only gave back millions to the community, he gave jobs, he gave dignity and he gave prosperity to people who would in turn build houses, buy carpeting, furniture and even maybe go out to dinner and a movie once in a while. And they would be able to live where they wanted to and go to dinner where they pleased and eat what they wanted to eat. He gave freedom. Does anyone think that it would be cheaper if you had to go through the federal government? Does anyone really believe the community would benefit nearly as well from "give backs"? Does anyone at all believe that "give back" money wouldn't have strings attached to attain some goals for some philosophical flavor of the day social agenda of the federal government?

When the earthquake struck Haiti the people of the United States personally gave millions to these poor suffering people, and that didn’t include what they gave via the U.S. government. I don’t know for sure, but I wouldn’t be surprised to find that the American public personally gave more than all the self-righteous socialist European finger wagers combined. How much did Cuba and Venezuela give? More importantly….how much did the individual Cubans and Venezuelans personally give?

The evidence of the last century clearly demonstrates this one absolute, irrevocable fact; doing good can only be done if business is done first, and that means profit….lots of it.

Forbes goes on to say; “Yet companies are increasingly assaulted by anti-business groups and social activists operating under the banners of "corporate social responsibility" and "socially responsible investing." Corporations are under pressure to adopt policies that can harm free enterprise and the companies themselves (Citigroup for example, agreed to limit lending in certain developing countries as a result of a campaign by the Rainforest Action Network). Companies are often tempted to appease these groups lest they suffer harmful publicity or hostile regulation.”
The activists make nothing, they are responsible for nothing, and as far as I can tell, they have only been successful at being activist extortionists who insist that everyone owes _________(fill in the blank) to promote their latest Philosophical Flavor of the Day. And as in the case of the Rainforest Action Network, and their greenie partners, forced lending institutions to stop lending for mining, logging and a host of things that would have helped people in the third world to come out of poverty, squalor, misery and suffering. Dystopia follows socialism and environmentalism like Sancho Panza followed Don Quixote.

If everyone really desires good social policy then do good business. That is the best social policy you could ask for because all sorts of good follows the prosperity created by doing "good business". Just ask the people of Haiti.


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