The Guilt Profiteers

Every war has its war profiteers. No matter how noble the cause, there are those for whom it is a cause for profit, and who coin the sacrifice of soldiers into gold. The Haliburton's we have with us always, and the Haliburton's are always well-connected with those running the war. They are not always as blatant as Lincoln's first Secretary of war, Simon Cameron. Lincoln queried one of Cameron's political supporter's, Sen. Thaddeus Stevens, about Cameron's honesty. “Well,” replied Stevens, “he wouldn't steal a red-hot stove.”

But our fathers were crude people in this regard, and with modern techniques, there may a way to steal the red-hot stove without getting burned. The current war presents a very lucrative niche indeed, not just in the war, but in the war-guilt. We are particularly sensitive to guilt in this war. Oh, not guilt about the war itself. We all want it to end, of course, but the truth is, it is not really very important, one way or the other. Most of us are simply not affected by the war. Few of us have relatives fighting there, and the all-volunteer army allows us to say, “well, that's what they signed up for.” Of course, that's not what the reserves signed up for at all, but that's another story, one we would rather not hear.

It was different in Vietnam (my war). Every mother's son, or nearly, was subject to the draft and many mother's sons went and fought and died. Everybody knew a dozen or more who were fighting, had fought, were wounded, or were dead. Today, for most of us, they are just names in the newspaper, and we don't read the newspaper. In the Vietnam war, everybody paid a 5% income-tax surcharge to help pay for the war. For this war, those who most insist that it be prolonged indefinitely are also the ones who insist that we do not pay for it. “Leave that to the children and grandchildren” could be the McCain campaign slogan.

This separation from actual events leaves us with a red-hot guilt, and the more we suppress it, the brighter it burns. We would very much like to support the troops. We slap magnetic “yellow ribbons” on the side of our SUV's, ribbons that say “support the troops,” always missing the irony that the SUV is at least part of the reason for the troops being in danger in the first place. Nevertheless, we do realize that such “support” is likely to be of limited value, and we really would like to do more. This guilt, which becomes stronger as the sufferings of the troops becomes more distant and abstract, presents a market opportunity to get our hands on the red-hot stove without getting burned.

I am sent daily an email from an outfit called GOPUSA. The “content” of the slick email consists mainly of links to “news” stories of the latest Democratic perfidy in general and the maliciousness of Barrack Obama in particular. But half the space is given over to ads for patent medicines, investment gurus, medical nostrums, and books by Ann Coulter and other right-wing intellectuals. And if you click on their links, you will be directed to a site where you can vote on whether to “bomb Iran.” But sometimes GOPUSA dispenses with the “news” portion and just sends pure ads. Investment advice (from Ann Coulter, no less), and Medical nostrums ("Now You Can Slow Down, Halt, or Even Reverse the Progression of Arthritis") are the most popular. I am sure that the entrepreneurs of GOPUSA promise an easily frightened audience that can easily be swayed by even these crude appeals. But yesterday's missive from this group was special, and deserves our close attention.

It was a letter signed by Brigadier Gen. Arthur F. "Chip" Diehl in behalf of the Coalition to Salute America's Heroes (CSAH). This sounds very noble, and the story that General “Chip” tells is very true: it is the story of soldiers having their homes foreclosed while they are recovering from battle wounds. This is indeed a cause for shame, and our guilt for letting this happen should indeed burn red-hot. But such appeals are always more interesting for what they don't say. And the first thing that GenChip doesn't tell us is that he is getting $5,000/month for making these appeals. And the second thing that Chip doesn't tell us is that he is being paid this money a certain Roger Chapin.

Roger Chapin is a “philanthropy entrepreneur” who, since the 80's has founded a string of non-profit organizations for such things as cancer, Alzheimer's disease and drug-free youth. These “charities” have raised millions of dollars, but very little of the money raised ever seems to find its way to any actual charity. Unless, that is, you consider Roger Chapin himself to be a charity. After all, last year, CSAH paid Roger and his wife (listed as “newsletter editor”) $562,000, according the Forbes Magazine. They also provided Roger with a $17,000 country-club membership, and a luxury Washington condo.

CSAH claims that it provided $20,000,000 in services to veterans. That sounds impressive, but it turns out that $18,750,000 of these “services” consisted of “phone cards” that are good only for calling a sports line.

Who did get the money? Well, Richard Vigurie, the right-wing direct-mail guru got $14 million of it, which doesn't include expensive gifts to him and his wife from Chapin but charged off to “Help Hospitalized Veterans,” another Chapin “charity” that doesn't seem to do much for veterans. You can read the Better Business Bureau report on CSAH here.

Nor is “Chip” the only general in on the scam. General Tommy Franks, who led the initial invasion way back when received $100,000 from Chapin for the use of his name. Now, It is likely that Generals Chip and Tommy have broken no actual laws. However, they have engaged in “conduct unbecoming an officer,” and as retired officers receiving generous pensions, they may still be under military justice. If so, they should be tried and stripped of their rank and pensions. Not that this will affect Chip that much; he has a deal with Chapin to pay him 75% of his salary on retirement. In any case, these generals have certainly earned our contempt. They have used to blood of the soldiers they were supposed to lead and turned it into money. Shame, and eternal shame on them.

Roger Chapin isn't the only scoundrel playing the guilt game. ABC News ran an investigation which found that of 28 veterans “charities” surveyed, only four received an “A” rating. Another three received a grade of “C” and the rest were “D” or “F”, mainly because so little money actually went to veterans. See the scorecard here.

The audience for something like GOPUSA legitimately feels that they are under attack from know-it-all liberals who are quite willing to tell them how worthless their faith and their families are. However, this fear, legitimate or not, makes them easy prey for hucksters. Add to this the fact that they tend to be supporter's of a war with which they have no actual involvement or real knowledge, and you can add guilt to fear, making them the perfect target audience for the guilt entrepreneurs. But at the same time, even Simon Cameron would have admired their chutzpah. He never did figure out how to get that red-hot stove.

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Fire the Boss!

In my last post, I discussed the Acton Institute film, The Call of the Entrepreneur. This compelling but intellectually shallow film converted entrepreneurship from a call to a cult, in my opinion; it treated the entrepreneur as a rarefied and special class of individuals crucial for the success of any economy. In this post, I review a film that takes the opposite tack, that bosses are not really necessary, and the ordinary workers possess the entrepreneurial skills necessary to run the most complex operations. Of course, this is not a new theme. The success of such enterprises as the Mondragón Cooperative Corporation in Spain, or the entire economy of Emila-Romagna, have long proven the success of the worker-manager to produce and manage complex products at a rate of return higher than the so-called “free market” enterprises, and to do so with fair wages and high social services.

The film is called The Take and is shot in Argentina, where, in the 90's, the United States and the IMF forced a program of economic “liberalization” on the country. Government enterprises were sold off, budgets reduced, social spending cut to bone, taxes on wealth reduced or eliminated, etc. The results, in Argentina as in so many other places, was a disaster. After some initial successes, the economy collapsed, which idled thousands of factories and businesses. The rich were allowed to ship all of their money out of the country, while bank accounts for ordinary Argentinians were frozen, so that people could not get at their own funds.

As the factories were being idled, and the workers laid off, usually with millions of pesos in unpaid wages, one group of workers at a suit factory refused to leave. They took over the factory and kept on producing and marketing their products. They made the bankrupt company a successful enterprise. Of course, there was one little problem: they didn't own the place legally. But they got so much support from the public, that the politicians deemed in inadvisable to evict them, at first, and later attempts to do so resulted in riots. Laws were then written to which could make expropriation possible under certain circumstances.

What is crucial here is that the workers here are not the vanguard of some ideology; they are not socialists, or communists, or libertarians, or even distributists. Rather, they are just workers, whose desperation forced them into desperate measures. But their actions did found a movement, and 180 closed factories and businesses have been taken over by the workers. Many of these enterprises exist in legal limbo and face a hostile government and court system. Nevertheless, they have made a success of it, and made it without bosses. The workers manage the companies democratically and set their own wages, policies, and decisions. They seem to be doing just fine without either bosses or government subsidies.

Many socialists have backed the movement, but in fact this seems to be the opposite of socialism, or at least of state-socialism (Marxism); it is not the government taking over the means of production, but the workers themselves. In fact, it seems to be a return to the libertarian and distributist ideal of self-organizing communities, able to manage their own affairs without help from either government or corporate bureaucracies.

But does that still leave a moral problem? Is expropriation just a fancy word for stealing? In the particular cases involved here, likely not. In the first place, the old owners left millions owed to the workers, as well as to the government, and on these grounds alone the workers have a valid claim on the properties. Further, the special treatment given to the rich by the Menem government, treatment that was nothing less than the transfer of funds from the public purse to private fortunes gives the public in general and the workers in particular another claim on these factories. But in the more general case, we must consider the purpose of property. Private property is meant to serve the common good by making the productive capacity of the earth more plentiful and more available to all. The words of John Paul II in Laborem Exercans are useful here:

The above principle, as it was then stated and as it is still taught by the Church, diverges radically from the programme of collectivism as proclaimed by Marxism and put into pratice in various countries in the decades following the time of Leo XIII's Encyclical. At the same time it differs from the programme of capitalism practiced by liberalism and by the political systems inspired by it. In the latter case, the difference consists in the way the right to ownership or property is understood. Christian tradition has never upheld this right as absolute and untouchable. On the contrary, it has always understood this right within the broader context of the right common to all to use the goods of the whole of creation: the right to private property is subordinated to the right to common use, to the fact that goods are meant for everyone.

They cannot be possessed against labour, they cannot even be possessed for possession's sake, because the only legitimate title to their possession- whether in the form of private ownership or in the form of public or collective ownership-is that they should serve labour, and thus, by serving labour, that they should make possible the achievement of the first principle of this order, namely, the universal destination of goods and the right to common use of them. From this point of view, therefore, in consideration of human labour and of common access to the goods meant for man, one cannot exclude the socialization, in suitable conditions, of certain means of production. In the course of the decades since the publication of the Encyclical Rerum Novarum, the Church's teaching has always recalled all these principles, going back to the arguments formulated in a much older tradition, for example, the well-known arguments of the Summa Theologiae of Saint Thomas Aquinas (Summa Th., II-II, q. 66, arts. 2 and 6; De Regimine Principum, book 1, chapters 15 and 17. On the social function of property see Summa Th., II-II, q. 134, art. 1, ad 3.).

In the light of the above, the many proposals put forward by experts in Catholic social teaching and by the highest Magisterium of the Church take on special significance: proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of businesses, so-called shareholding by labour, etc.

And his words from Centesimus Annus would seem to provide a clear warrant for the actions of the workers:

Ownership of the means of production, whether in industry or agriculture, is just and legitimate if it serves useful work. It becomes illegitimate, however, when it is not utilized or when it serves to impede the work of others, in an effort to gain a profit which is not the result of the overall expansion of work and the wealth of society, but rather is the result of curbing them or of illicit exploitation, speculation or the breaking of solidarity among working people. Ownership of this kind has no justification, and represents an abuse in the sight of God and man.

In any case, the film raises the question of whether we really need bosses as much as we have been led to believe. Contrary to the cultic view of the Acton Institute, all men seem to have the spark of the entrepreneur within them, and it does not take the cut-throat world of competition to bring it out. Rather the opposite seems to be true: in a spirit of cooperation, companies flourish even when the “bosses” drive them to bankruptcy. As on of the workers in the film says, “We don't know why accounting was such a problem for the bosses; we are able to do it easily enough.”

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The Cult of Entrepreneurship

A few days ago, I was asked to serve on a panel discussion at the University of Dallas concerning a film produced by The Acton Institute. The title of the film was The Call of the Entrepreneur, and its central question is, "Is the entrepreneur virtuous or vicious?" Like most of the products of The Acton Institute, it was media slick and intellectually shallow. Here are the comments I gave to the group:

One reason that this film is important to me is that the social justice class which I teach emphasizes the role of the entrepreneur in shaping the business world, and hence the moral and economic universe in which we live. The book we use, which I had the honor to write, is called The Vocation of Business: Social Justice in the Marketplace. It's point is that business, in my view, is not merely a job, but a vocation, a calling to change the world, that is, to apply our moral imagination to the problems of the world. The proper understanding of entrepreneurship is crucial, in my opinion, to the proper understanding of the connection between human development and economics. And since entrepreneurship is so crucial, it is crucial to get it right. When we have an incorrect or incomplete understanding, we end up distorting the meaning of entrepreneurship; we end up limiting it by converting it from a call to a cult, one limited to the few, rather than extended to the many, as it should be. All are called to invest their talents, and not to hide them. And indeed, all people want to do so, or nearly all. It is usually cultural and institutional bars to creativity that limit us, not something lacking in the human person, or limited to only a few. For the person is, or so we believe, the very image of God, the creator of all, the first worker, and the first to earn his day of rest.

The strengths of this movie, aside from its excellent production values, are two. The first is the engaging personal stories, especially of Jimmy Lai and the Compost King. Entrepreneurship is essentially a narrative, a story whose end cannot be known in advance, but it always an adventure, possibly a romance, and more than occasionally a tragedy. We cannot know, we can only do, and do our best. And so personal history is perhaps the best way to convey the point, rather than abstract demonstration. The second, and even more important point, is the strong connection the film makes between entrepreneurship and personal virtue. Indeed, virtue is the foundation of all human action, and every successful action requires at least some degree of personal virtue. Even robbing a bank requires virtues of courage, planning, perseverance, and so forth.

And therein lies the problem; for if virtue in some degree is required even to rob a bank, then personal virtue alone cannot determine the virtue of an act, or of an enterprise. Something else is required. Or rather, two other things are required: the ends, the purpose of the act, or in this case, the purpose of the firm, must tend towards the common good, and the means must themselves be good. A failure in either the means or the ends makes an act—or an enterprise—vicious, even when virtuously performed. Extolling entrepreneurship without directing it towards the common good gives us an incomplete understanding.

The point is this: Entrepreneurship by itself is neither good nor bad. Rather, it is the field of human action in the social and economic order. But the direction we choose to go on that field is another matter.

We can illustrate the range of human actions that are “entrepreneurial” by two activities that lie at opposite poles of that range: at one pole we have motherhood. The mother “produces” (if I may put it that way) a unique human product (if I may put it that way), that is, the human being, the active agent, end, and purpose of all human production. She injects a value into the world, and into the world of business, whose value can never be known, and for which a price can never be set. And although the family is the basic economic unit, her recompense is never in money. She takes on a long-term commitment whose course she cannot know, but which most women find difficult to repudiate, even in the most dire of circumstances. At the other end of the pole, we have the bank robber, who creates no wealth of his own, but merely appropriates the wealth of others. His actions are purely for profit, without adding anything to the stock of society. At one end of the scale, we have a pure self-giving; at the other, only a self-interested taking.

Therefore, we can never judge entrepreneurship to be good per se. Rather, we must judge it by the contribution it makes, or fails to make, to the common good. For many enterprises fail to make such a contribution. Certainly, we know that harmful products find a market, no less than good ones, products such as drugs, pornography, and sub-prime loans. I have little business experience with the first two, but a great deal of experience with the last. For the last five years, I have seen increasing corruption in the mortgage markets, aided by an army of entrepreneurs working from the highest levels of finance down to brokers working out of their spare bedrooms. The deals given to buyers got to be so dirty, that after each closing you just wanted to go home and take a shower. This was entrepreneurship that more resembled bank robbery, even though it was the bank pulling off the robbery.

We should also be aware of the institutional barriers to entrepreneurship. The film did a good job of pointing out the barriers in a communist tyranny. Indeed, raising such barriers is part and parcel of any tyranny, and tyranny can be judged, at least in part, precisely by the barriers it raises to such human development. We know that entrepreneurship tends to die in socialist collectives; however, when production is gathered into gargantuan corporate collectives, with immense private bureacracies, does entrepreneurship suffer a similar fate? In other words, in our society, is the corporation the place where entrepreneurship goes to die? My own experience of 17 years in large corporations would lead me to believe this.

Finally, there are cultural barriers to entrepreneurship, to the full development of the human person in the business world. Most of us, alas, are culturally conditioned to seeking a “good” job rather than following a real vocation. We tend to believe, unconsciously perhaps, that our well-being depends on being in the good graces of ruling bureaucracies. We are losing—or have already lost—the habit of entrepreneurship, or that creativity that is part and parcel, to a greater or lesser degree, of every human being. Indeed, entrepreneurship is viewed, to often, as something “special,” something reserved to a group set apart from the rest. At this point, it becomes not the call, but the cult of the entrepreneur. And the cult of the entrepreneur is very like the romantic “cult of the artiste.” This cult, we know, limits art to a few rarefied individuals; it results in both less art and worse art. Both art and entrepreneurship are part and parcel of what it means to be human. One applies to the aesthetic realm, and the other to the moral realm. But both apply to all men and women.

In short, then, entrepreneurship is basic to human development and creativity, and raising barriers to it, whether public or “private” barriers, is part of the essence of tyranny. But we need to see it as the field of moral action in the world, and judge it by its contribution to the common good, and human development.

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