Despite the recent turmoil in the financial markets and the weakness
of the Asian economies, things are looking good for North American business.
Corporate profits are up, the restructuring imposed by global competition
has begun, and the future looks relatively bright.
So what's the problem?
The problem, for some people apparently, is that corporate profits are
In the past few weeks I've come across a number of articles in disparate
types of media all arguing for the same thing; that businesses, in light
of their large profits, aren't doing enough to give away that money to
whatever needy group the author is championing. Let's take a look at just
a few examples:
In Canada the only institution which regularly has hate heaped on it more
than politicians are the nation's banks. For the past few years Canada's
banks have been reaping record profits thanks to emerging markets (where
Canadian banks have many assets), stronger growth at home, and better
management. Does this earn the approval of the Canadian public and media?
Not bloody likely.
Banks are under the gun by activists to begin loaning more money in the
vain hopes of creating long-term employment, and to become more "responsible"
Now groups like the Canadian Community Reinvestment Coalition aren't calling
for more capital to be loaned to small businesses because they believe
in a freer market, they simply want someone to spend more money on things
that the coalition believes in. The coalition's Duff Conacher, who is
obviously not an economist, says that if banks made more capital available
to small business, unemployment would be reduced.
The call doesn't come just from coalitions, but (not surprisingly) from
politicians as well. Liberal MP Tony Ianno (the Trinity-Spadina riding
in Toronto) recently stated that loaning money to small business wasn't
just smart, but moral.
"I believe banks have a responsibility to lend to small business,
not just large," says Ianno, whose website says he has a passion
for social justice and small business expertise. Apparently those qualities
make a better politician than a businessman, or Ianno would still be using
that alleged expertise.
"Then Canadians would have more jobs, which is how everyone can participate
in the economic recovery," he said. Ianno also believes that business
should be 'encouraged' to meet a ratio of one-third of their corporate
commercial loan portfolios being loaned to small businesses.
If it isn't loaning money to small businesses, banks are also being excoriated
for not giving enough to charity. According to Toronto Star columnist
Ellie Tesher, quite a few Canadians view it as "obscene" that
banks make huge profits "in the face of massive government cutbacks
to equally significant areas of society -- health, education, culture".
So what is Tesher's call to banks which could actually face a government
panel investigating their profits?
Banks have a social duty, says the piece, to return part of their money
back to the community. That may keep the dogs in Ottawa...at least for
a little while.
Says University of Toronto economics professor Larry Smith, who was quoted
in the piece, "As good corporate citizens, there's a social duty
of the banks and their shareholders who've made a huge return on their
stocks to give back to the community."
Sounds a little like Public Enemy's Chuck D demanding that Nike give back
a portion of their sneaker sales to urban communities just because Air
Jordan's are in vogue, doesn't it? Smith is also a warning to parents
who believe their children come back better education when they head off
Take a note to the president, says our Tesher, the next time you go to
the bank. Tell him or her, she says, that more money should be contributed
when "it's so badly needed." Of course, to Tesher, ineffective
money spent by government should be matched by ineffective money spent
Of course, it's not just banks that hear the cries of outrage over profit.
Capitalist activists should well remember T.J. Rodgers of Cypress Semiconductor
defending himself in 1996 against the Sisters of Saint Francis, a group
which attacked the company's board for also not being a good "corporate
This year it's Microsoft. Wired magazine's Jon Katz recently
wrote an open letter to Bill Gates asking him to spend a mere
$5- to $9 billion to outfit the nation's schools with computers
and Internet access...out of Gates' own, admittedly deep, pockets.
What would this buy Gates and Microsoft, asks Katz? Instead of being attacked
as an evil monopoly, Gates and his company would suddenly been seen beneficial
aspects of the American economy, more potent than President Bill Clinton
himself, who can only talk about doing the same thing.
Gates' money, says Katz, would mark him as a "corporate leader and
a nice guy to boot."
The fact that Gates and Microsoft employ thousands of employees, quite
a few of whom are extremely well-off thanks to generous stock options;
pays millions in taxes; provides world leading software which allows the
average person to do their work better; and already gives millions in
free personal computers and software to the poor and schools means little
to Katz. They need to do even more to prove that they are useful to the
This situation is partly the fault of business itself. The men and women,
with only a few exceptions like Rodgers, who run profitable companies
are afraid to declare that they have a right to those profits.
Rather than argue that their profits are the material representation of
freedom itself and that they have a right to them, the corporate
elite of North America rush to justify themselves on the grounds of how
much money they give away to worthy causes....causes that are often philosophically
opposed to the very business giving them the money.
What do you say to a group of people who will not stand up for their own
rights, or may not even know that they are right?
What does one say to a person who does not know that the very action they
engage in, the selling of their goods and services on the free market,
to be one of the most basic rights of humanity? What does one say when
Joe or Jane Q. Executive does not realize their very morality is being
When people like Katz and Tesher argue that businesses are not doing their
part for society, what they are saying, perhaps without even knowing it,
is that those businesses are immoral.
This is an important point. By arguing those businesses are immoral which
do not contribute to a level that Katz and Tesher find acceptable, they
are also arguing that capitalism itself is immoral. The primary raison
d'Ítre for a business is the creation of profit, not charity.
Katz and Tesher, and their ilk, may not be capitalist, but their definition
of capitalism rests on altruist grounds, that capitalism exists to meet
the common good, not the individual good. It is time that we armed our
corporate elite with the tools to defend themselves.
Back in the early 1970s a friend of this website helped found an
organization which distributed copies of Ayn Rand's Atlas Shrugged
to Alberta oilmen with certain parts of the novel underlined. The campaign
was designed to inform them of the "looting and the sanction of the
victim" that was being aimed at them. By his account, it was successful
in the sense that the oilmen understood what the government was really
trying to do.