Uncle Miltie
Andrew Leonard has a piece up in Salon today announcing a new feature Salon will be running on corporate citizenship. The jumping-off point for Leonard's piece, though, is what actually caught my interest: Leonard starts with a response to a 1970 New York Times Magazine piece written by Milton Friedman, "The Social Responsibility of Business is to Increase its Profits". Which I read. Because I felt like I should. I mean, I'm not really familiar with Friedman other than knowing his name gets thrown around by conservative-types a good bit.
Let's just say, we are not impressed.
This is one of those ironic things that happens, you know? You hear people talking about Ayn Rand, for instance, how smart and awesome and wonderful she was and how you really should read her stuff, and you start thinking maybe you ought to give her a try, that even if you don't come around to her way of thinking, at least she must be an engaging, talented and provocative authoress. She has to be, what with all the books she's sold and how all of her stuff tends to stay in print and prominently displayed in the serious fiction section of the bookstore. Right? You don't have to be some kind of liberal Catholic to dig Victor Hugo's stuff, for instance; it still works as melodrama and adventure fiction even if your eyes glaze over a little at some of the religious imagery and angst embedded between pages 239 and 748 or whatever. Or, to offer another gratuitous example, you don't have to be an ultra-libertarian polyamorous nudist military fanboy to appreciate Robert Heinlein as a guy who could write a fast, tight, rockin' little SF novel or two (but it helps). So you pick up a Rand and you discover that some people are batshit insane and have no literary (loosely speaking) taste whatsoever, that Ayn Rand isn't just shit as literary fiction, it would be shit as pulp fiction, that you don't even have to get into the moral dimensions of her philosophy to totally dismiss her petrified dialogue, absurd plots, and the utterly dimensionless generic archetypes she passes off as characters; that, in fact, there are better-written and worthier comic books you could have been reading instead, and I'm not talking about some kind of gargantuan Alan Moore tome where the entire secret history of Western Civilization is symbolically distilled into some kind of crazy careening rollercoaster ride built around pansexual Victorian children's book characters, I'm talking about circa 1965 Superman/Batman teamups written by jaded drunks who couldn't come up with anything better than "Jimmy Olsen and Robin are kidnapped by alien gorilla-men and Supes and Batman save them by preparing a five-course meal for the kidnappers" before deadline and so they ran with it because they hoped fucking nine-year-olds wouldn't notice this was the second time they'd run with that storyline in the last eight months.
I'm either dancing around or building up to the part where I say the Friedman essay is one of the dumbest things I've read in a while, and this during a Presidential season in which the Republicans' "smart" candidate just came out with a proposal to fire all the school janitors and replace them with students (because, aside from the Victorian workshop horrors the proposal recalls, we all know how much firing adults helps the economy and how eager teenagers are to do chores and spend more time at school; yeah, the man's a regular Einstein, is what he is). Actually, it is a little amazing insofar as the one thing that matches its cretinous stupidity is its utter presumption and pompousness. If Milton Friedman is one of the intellectual lights of modern conservatism and this is typical of his work... look, there's no nice and respectful way to say that a movement based on the kind of self-serving, self-righteous, mouth-breathing inanity exemplified in "The Social Responsibility of Business is to Increase its Profits" has not only abandoned any hope of intellectual credibility, but it may have never held any to begin with.
Friedman expends a fair bit of ink on the proposition that a corporate executive's only business is satisfying the desires of shareholders, and that if he promotes any other moral scruples he might have, he's being "anti-democratic" and "imposing taxes" on shareholders and deciding how those "taxes" are to be spent. This is, he concludes, bad and "collectivist", and that's very bad for the same reason collectivism is very bad (because it is, you see). Understand, I'm just telling you what he said and I'm encouraging you to read it for yourself (well, not really "encouraging"; I imagine you have better things to do with your time, but if you don't want to take my word for what he says, please, have at it). If you're suspecting Friedman comes off sounding horribly confused and like he's mixing mental metaphors at some basic level, I think you've pretty much hit the nail on the head: I'm not sure how an executive making a business decision (for any reason, civic-minded or otherwise) that reduces dividends or stock value, constitutes a "tax" on shareholders, but I imagine if the shareholders aren't happy with his performance, they'll call for his firing or resignation. I mean, the whole thing sounds terribly hypothetical and speculative: "Well, our dividends could have been higher, maybe, if the CEO hadn't made such-and-such decision... or not. But the fact that there's some unknown difference between the dividend I actually received and the dividend I could have received in an infinite number of alternate universes where my dividend was higher by some sum between one cent and ten gabitrizillion dollars (Canadian), causes me to feel as if I have been unfairly taxed without any representation other than any votes the particular form of shares I hold entitle me to and no recourse other than selling this ownership interest I voluntarily purchased (or inherited or received as a gift) that nobody is forcing me to retain."
So I'm not a brilliant economist, which is why I guess I always understood a tax was where the government collects money from you when you engage in certain kinds of transactions, and had no idea it was also when you arbitrarily don't receive additional money you might have been entitled to from a voluntary investment under some completely different set of circumstances that didn't actually occur this time. Who knew? See, you learn something every day. I've gotta remember this if I ever go to Vegas.
But here's the thing that really strikes me as stupid about Friedman's argument: let's stipulate, for a moment, that his argument has some kind of logical cohesion and he's right. Hard to do, I know, but let's just pretend, shall we? Let's suppose a corporate executive has no moral duties beyond his duties to the shareholders in the corporation. Does this absolve the corporation (or, in a recursive way, the executive) of civic responsibility?
Only if you presume, as Friedman pompously does (following a quick gloss over his one shot at intellectual honesty), that the only raison d'être for business is in fact maximizing profitability. Otherwise, all Friedman has successfully managed is to shift the moral responsibility to shareholders.
Here's the big deal Friedman glosses in a single paragraph before missing his own point:
Let's suppose that Megacorp, as an artificial person, is not to be held morally culpable for cutting costs by dumping millions of gallons of known carcinogens into the river that supplies Sunnytown with most of its drinking water, instead of disposing of the poisons in an expensive-but-approved-of manner. And let's suppose the CEO of Megacorp isn't to be held morally responsible since he made the rational, ethical Friedman-approved decision not to "tax" Megacorp's shareholders by making a decision that would have reduced their dividends in pursuit of a social agenda they didn't endorse (a much more dubious proposition, but bear with me). Okay, then why aren't the shareholders in Megacorp, who put their own financial betterment above the health and safety of the citizens of Sunnytown, to be condemned and held responsible for making a choice that caused (or risked) avoidable and unnecessary injury to their fellow human beings?
This is the easy case: profit prioritized over harm. One could certainly broaden the topic to include profit prioritized over helping/contributing/giving back, though one recognizes that this gets into dodgier territory. I hope we'd all agree shareholders in a business have an obligation to not hurt anyone even if there's not necessarily a clear-cut obligation for shareholders to help. That is, I think not shitting your nest (or even somebody else's) is an ethical no-brainer, I'm not trying to say you need to go a few steps further and build a group home for mentally disabled economists or anything like that.
I don't think Friedman meant to argue that corporate shareholders are evil or irresponsible, but that seems like a fair conclusion you can draw from his argument; certainly, I think it's a fairer conclusion than the one he actually draws, since he apparently means that nobody is responsible to anybody except it's important that businessmen generate profits, profits and more profits for investors. That this could be a quick-and-easy recipe for a tragedy of the commons scenario seems to entirely evade the man. The CEO shouldn't think of anyone but the investors, and if all the investors think about is their bottom line, well, it's nobody's fault if civilization collapses in the meantime. It isn't like the shareholders could have been expected to deal with the day-to-day running of the company--that's the executive's job. It isn't like the executive could have been expected to tell the shareholders that hiring locals, installing air filters in the smokestacks, replacing that one machine everybody called "The Mangler" for mysterious reasons and donating old computers to the local elementary school would have been expensive, yes, and would have impacted profits, yes, but they not only would have been nice things to do that all the shareholders could have felt good about, but also would have avoided this whole business where an illiterate, unemployed mob of cancer-riddled amputees stormed the investors' houses, dragged them screaming into the streets and lynched them within sight of their own burning mansions. It's nobodies fault, unless it's the mob's; anyway, shit happens.
It's only fair to note that I engaged in one bit of stereotyping just to make a point in the previous paragraph: specifically, not every corporate shareholder owns a mansion or possesses any great wealth at all. Not really the point, of course. I don't see how anybody owning stock in a corporation is off the hook when it comes to making sure they hold shares in a company that exercises civic responsibility, or how those who hold voting shares don't have a responsibility to delegate their moral duties to the CEO along with the responsibility for running the company, with the explicit understanding that what is right isn't always the most-profitable thing to do in the short term, though it may keep the goose alive to lay more (albeit smaller) golden eggs in the future. (You know, even if the residents of Sunnytown don't hang you and burn your house down, maybe all of them dying of cancer could have, you know, a small effect on your profit margins if they happen to be your consumers in some direct or indirect way. Just thought I'd point that out.)
But hey, what does Milton Friedman care? He's dead.
It occurs to me that it might be just a tiny bit unfair of me to judge a ninety-four year human life from one magazine article written when Friedman was fifty-eight. He did win a Nobel prize, though so did Henry Kissinger, so, y'know, whatever that's worth. (President Obama won one basically for just showing up to work, though he did have a lot of shit on his desk left there by the screw-off he replaced, so maybe he deserved some kind of award for not taking one look at the portfolio and saying, "Fuck this, I'm outta here, Joe can tackle this if he wants, but I'm done.") But the piece in question is really fucking stupid, and could only be credited to a first-calibre-mind if the mind in question were jet-lagged and hung over, or possibly exposed to a finely-crafted beating with a good, solid Craftsman hammer bought the same morning from Sears. I've had off days, but fucking hell, I flatter myself I've never been that off. And considering that a perusal of Friedman's Wikipedia entry to see if I'm missing anything reminds me that he was an adviser to a really terrible President and that he originated or promoted a whole slate of ideas that were really just terrible and disastrous. (My favorite: Friedman apparently wanted to abolish medical licenses. Because, let me just tell you, the days before medical licensure? Those were the golden days of medicine. Talk about your free market driving innovation, there were people prescribing medicines for everything, everywhere, all over the United States, and some of them weren't even dangerous, a lot of them were completely harmless. Yep, I don't know about you, but I'm totally nostalgic for the glory days when I could go to the corner drugstore and purchase a health tonic of colored sugar water and cocaine knowing it would cure my lassitude and heal my pep just like the poster above the counter diagnoses, yessir. Daddy needs his medicine.)
But this is an article that doesn't even survive its own premises. Gods know: I wish I'd read a World's Finest instead; it would've been more intellectually rigorous.
Let's just say, we are not impressed.
This is one of those ironic things that happens, you know? You hear people talking about Ayn Rand, for instance, how smart and awesome and wonderful she was and how you really should read her stuff, and you start thinking maybe you ought to give her a try, that even if you don't come around to her way of thinking, at least she must be an engaging, talented and provocative authoress. She has to be, what with all the books she's sold and how all of her stuff tends to stay in print and prominently displayed in the serious fiction section of the bookstore. Right? You don't have to be some kind of liberal Catholic to dig Victor Hugo's stuff, for instance; it still works as melodrama and adventure fiction even if your eyes glaze over a little at some of the religious imagery and angst embedded between pages 239 and 748 or whatever. Or, to offer another gratuitous example, you don't have to be an ultra-libertarian polyamorous nudist military fanboy to appreciate Robert Heinlein as a guy who could write a fast, tight, rockin' little SF novel or two (but it helps). So you pick up a Rand and you discover that some people are batshit insane and have no literary (loosely speaking) taste whatsoever, that Ayn Rand isn't just shit as literary fiction, it would be shit as pulp fiction, that you don't even have to get into the moral dimensions of her philosophy to totally dismiss her petrified dialogue, absurd plots, and the utterly dimensionless generic archetypes she passes off as characters; that, in fact, there are better-written and worthier comic books you could have been reading instead, and I'm not talking about some kind of gargantuan Alan Moore tome where the entire secret history of Western Civilization is symbolically distilled into some kind of crazy careening rollercoaster ride built around pansexual Victorian children's book characters, I'm talking about circa 1965 Superman/Batman teamups written by jaded drunks who couldn't come up with anything better than "Jimmy Olsen and Robin are kidnapped by alien gorilla-men and Supes and Batman save them by preparing a five-course meal for the kidnappers" before deadline and so they ran with it because they hoped fucking nine-year-olds wouldn't notice this was the second time they'd run with that storyline in the last eight months.
I'm either dancing around or building up to the part where I say the Friedman essay is one of the dumbest things I've read in a while, and this during a Presidential season in which the Republicans' "smart" candidate just came out with a proposal to fire all the school janitors and replace them with students (because, aside from the Victorian workshop horrors the proposal recalls, we all know how much firing adults helps the economy and how eager teenagers are to do chores and spend more time at school; yeah, the man's a regular Einstein, is what he is). Actually, it is a little amazing insofar as the one thing that matches its cretinous stupidity is its utter presumption and pompousness. If Milton Friedman is one of the intellectual lights of modern conservatism and this is typical of his work... look, there's no nice and respectful way to say that a movement based on the kind of self-serving, self-righteous, mouth-breathing inanity exemplified in "The Social Responsibility of Business is to Increase its Profits" has not only abandoned any hope of intellectual credibility, but it may have never held any to begin with.
Friedman expends a fair bit of ink on the proposition that a corporate executive's only business is satisfying the desires of shareholders, and that if he promotes any other moral scruples he might have, he's being "anti-democratic" and "imposing taxes" on shareholders and deciding how those "taxes" are to be spent. This is, he concludes, bad and "collectivist", and that's very bad for the same reason collectivism is very bad (because it is, you see). Understand, I'm just telling you what he said and I'm encouraging you to read it for yourself (well, not really "encouraging"; I imagine you have better things to do with your time, but if you don't want to take my word for what he says, please, have at it). If you're suspecting Friedman comes off sounding horribly confused and like he's mixing mental metaphors at some basic level, I think you've pretty much hit the nail on the head: I'm not sure how an executive making a business decision (for any reason, civic-minded or otherwise) that reduces dividends or stock value, constitutes a "tax" on shareholders, but I imagine if the shareholders aren't happy with his performance, they'll call for his firing or resignation. I mean, the whole thing sounds terribly hypothetical and speculative: "Well, our dividends could have been higher, maybe, if the CEO hadn't made such-and-such decision... or not. But the fact that there's some unknown difference between the dividend I actually received and the dividend I could have received in an infinite number of alternate universes where my dividend was higher by some sum between one cent and ten gabitrizillion dollars (Canadian), causes me to feel as if I have been unfairly taxed without any representation other than any votes the particular form of shares I hold entitle me to and no recourse other than selling this ownership interest I voluntarily purchased (or inherited or received as a gift) that nobody is forcing me to retain."
So I'm not a brilliant economist, which is why I guess I always understood a tax was where the government collects money from you when you engage in certain kinds of transactions, and had no idea it was also when you arbitrarily don't receive additional money you might have been entitled to from a voluntary investment under some completely different set of circumstances that didn't actually occur this time. Who knew? See, you learn something every day. I've gotta remember this if I ever go to Vegas.
But here's the thing that really strikes me as stupid about Friedman's argument: let's stipulate, for a moment, that his argument has some kind of logical cohesion and he's right. Hard to do, I know, but let's just pretend, shall we? Let's suppose a corporate executive has no moral duties beyond his duties to the shareholders in the corporation. Does this absolve the corporation (or, in a recursive way, the executive) of civic responsibility?
Only if you presume, as Friedman pompously does (following a quick gloss over his one shot at intellectual honesty), that the only raison d'être for business is in fact maximizing profitability. Otherwise, all Friedman has successfully managed is to shift the moral responsibility to shareholders.
Here's the big deal Friedman glosses in a single paragraph before missing his own point:
In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose–for example, a hospital or a school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services. [emphasis added]
Let's suppose that Megacorp, as an artificial person, is not to be held morally culpable for cutting costs by dumping millions of gallons of known carcinogens into the river that supplies Sunnytown with most of its drinking water, instead of disposing of the poisons in an expensive-but-approved-of manner. And let's suppose the CEO of Megacorp isn't to be held morally responsible since he made the rational, ethical Friedman-approved decision not to "tax" Megacorp's shareholders by making a decision that would have reduced their dividends in pursuit of a social agenda they didn't endorse (a much more dubious proposition, but bear with me). Okay, then why aren't the shareholders in Megacorp, who put their own financial betterment above the health and safety of the citizens of Sunnytown, to be condemned and held responsible for making a choice that caused (or risked) avoidable and unnecessary injury to their fellow human beings?
This is the easy case: profit prioritized over harm. One could certainly broaden the topic to include profit prioritized over helping/contributing/giving back, though one recognizes that this gets into dodgier territory. I hope we'd all agree shareholders in a business have an obligation to not hurt anyone even if there's not necessarily a clear-cut obligation for shareholders to help. That is, I think not shitting your nest (or even somebody else's) is an ethical no-brainer, I'm not trying to say you need to go a few steps further and build a group home for mentally disabled economists or anything like that.
I don't think Friedman meant to argue that corporate shareholders are evil or irresponsible, but that seems like a fair conclusion you can draw from his argument; certainly, I think it's a fairer conclusion than the one he actually draws, since he apparently means that nobody is responsible to anybody except it's important that businessmen generate profits, profits and more profits for investors. That this could be a quick-and-easy recipe for a tragedy of the commons scenario seems to entirely evade the man. The CEO shouldn't think of anyone but the investors, and if all the investors think about is their bottom line, well, it's nobody's fault if civilization collapses in the meantime. It isn't like the shareholders could have been expected to deal with the day-to-day running of the company--that's the executive's job. It isn't like the executive could have been expected to tell the shareholders that hiring locals, installing air filters in the smokestacks, replacing that one machine everybody called "The Mangler" for mysterious reasons and donating old computers to the local elementary school would have been expensive, yes, and would have impacted profits, yes, but they not only would have been nice things to do that all the shareholders could have felt good about, but also would have avoided this whole business where an illiterate, unemployed mob of cancer-riddled amputees stormed the investors' houses, dragged them screaming into the streets and lynched them within sight of their own burning mansions. It's nobodies fault, unless it's the mob's; anyway, shit happens.
It's only fair to note that I engaged in one bit of stereotyping just to make a point in the previous paragraph: specifically, not every corporate shareholder owns a mansion or possesses any great wealth at all. Not really the point, of course. I don't see how anybody owning stock in a corporation is off the hook when it comes to making sure they hold shares in a company that exercises civic responsibility, or how those who hold voting shares don't have a responsibility to delegate their moral duties to the CEO along with the responsibility for running the company, with the explicit understanding that what is right isn't always the most-profitable thing to do in the short term, though it may keep the goose alive to lay more (albeit smaller) golden eggs in the future. (You know, even if the residents of Sunnytown don't hang you and burn your house down, maybe all of them dying of cancer could have, you know, a small effect on your profit margins if they happen to be your consumers in some direct or indirect way. Just thought I'd point that out.)
But hey, what does Milton Friedman care? He's dead.
It occurs to me that it might be just a tiny bit unfair of me to judge a ninety-four year human life from one magazine article written when Friedman was fifty-eight. He did win a Nobel prize, though so did Henry Kissinger, so, y'know, whatever that's worth. (President Obama won one basically for just showing up to work, though he did have a lot of shit on his desk left there by the screw-off he replaced, so maybe he deserved some kind of award for not taking one look at the portfolio and saying, "Fuck this, I'm outta here, Joe can tackle this if he wants, but I'm done.") But the piece in question is really fucking stupid, and could only be credited to a first-calibre-mind if the mind in question were jet-lagged and hung over, or possibly exposed to a finely-crafted beating with a good, solid Craftsman hammer bought the same morning from Sears. I've had off days, but fucking hell, I flatter myself I've never been that off. And considering that a perusal of Friedman's Wikipedia entry to see if I'm missing anything reminds me that he was an adviser to a really terrible President and that he originated or promoted a whole slate of ideas that were really just terrible and disastrous. (My favorite: Friedman apparently wanted to abolish medical licenses. Because, let me just tell you, the days before medical licensure? Those were the golden days of medicine. Talk about your free market driving innovation, there were people prescribing medicines for everything, everywhere, all over the United States, and some of them weren't even dangerous, a lot of them were completely harmless. Yep, I don't know about you, but I'm totally nostalgic for the glory days when I could go to the corner drugstore and purchase a health tonic of colored sugar water and cocaine knowing it would cure my lassitude and heal my pep just like the poster above the counter diagnoses, yessir. Daddy needs his medicine.)
But this is an article that doesn't even survive its own premises. Gods know: I wish I'd read a World's Finest instead; it would've been more intellectually rigorous.
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