I Got an E-mail Today from Ritz-Carlton….

by Don Boudreaux on April 27, 2011

in Myths and Fallacies, Seen and Unseen

Dear Ritz-Carlton:

Thanks for your e-mail celebrating your and your employees’ participation in “Give Back Getaways” – activities in which you and your employees (along with some of your customers) “give back to the community.”

Have you taken something that doesn’t belong to you?  If so, by all means give it back!  (But please don’t applaud yourself for doing so.)  If, though, you’ve not taken anything that doesn’t belong to you, you possess nothing that you can give back.

Being a profitable corporation, you certainly possess something that you can give; and I genuinely applaud the generosity that prompts you, your employees, and your customers to give.  (I do hope, however, that you direct your giving according to reasonable criteria rather than according to the hot winds blown by political correctness.)

Please, though, unless your profits are the product of dishonest deals or theft, please drop the rhetoric of “giving back.”  This sort of talk implies that you possess something that isn’t rightfully yours.  It fuels the common misapprehension that corporate profits are either ill-gotten gains or, at best, wealth subtracted from that of other persons.

Because the vast majority of market exchanges are positive-sum deals, your success at business means that you create wealth.  You value the $$$ you get for renting a hotel room by more than you value keeping that room vacant, and your guests value the opportunity to spend a few nights in that room more than they value whatever else they might have bought with the $$$ they voluntarily paid to you for the room.  You gain (“profit”).  Your guests gain.  No one loses.  Wealth is created.

By all means, give if your shareholders approve.  But stop calling it “giving back.”  Your profits aren’t pirated booty; they’re legitimate earnings.

Sincerely,
Donald J. Boudreaux

Be Sociable, Share!

Comments

comments

106 comments    Share Share    Print    Email

{ 106 comments }

Randy April 27, 2011 at 1:44 pm

I have a big problem with that phrase too. Working for a corporation though, I am accustomed to such open displays of political correctness. I believe its done mostly to head off lawsuits and political activists.

SaulOhio April 27, 2011 at 1:50 pm

But appeasement never works. They just expect you to give even more back.

Mesa Econoguy April 27, 2011 at 7:00 pm

Agreed, I see it/hear it daily, and it is a response to the fashionable leftward shift of “communitarianism” and good citizenship (read: good salesmanship/PR).

And Saul sees the pitfall – it never stops, and grows ever larger, distorting the purpose of the firm and profit maximization.

BugsCawfey April 27, 2011 at 2:15 pm

A. Freakin. Men.

Slappy McFee April 27, 2011 at 2:48 pm

I don’t take much offense to it:

1) It can be viewed by Ritz as a marketing ploy in order to gain customers

2) The customers can share the delusion that they are giving and make themselves feel better, just like the crab fisherman working for “like being on the water” compensation.

Justin P April 27, 2011 at 3:01 pm

It’s all just mental masterbation…

vidyohs April 28, 2011 at 9:34 am

Very apt, and done for the same reason.

Marcus April 27, 2011 at 2:54 pm

I’m not sure I understand the complaint. It’s clearly marketing. What’s wrong with that?

Is it because ‘give back’ isn’t precisely true? Do you complain when other marketing slogans aren’t precisely true?

On the other hand, if you see it as an opportunity for an economics lesson then you should direct the lesson to your readers. Directing it at Ritz-Carlton is a bit condescending, I think.

Just my opinion.

Marcus April 27, 2011 at 2:57 pm

And, shouldn’t the economics lesson be on incentives and why such marketing benefits their bottom line?

Don Boudreaux April 27, 2011 at 3:00 pm

One doesn’t have to come to Cafe Hayek to determine that successful marketing efforts contribute to a firm’s bottom line.

Don Boudreaux April 27, 2011 at 2:58 pm

Of course it’s marketing. But I dislike the fact that such a phrase – which is very common – contributes the the already widespread economic ignorance that holds that profits are taken from others rather than are positive sums produced.

Marriott Corp. (the owner of Ritz-Carlton) has every right to market as it wishes. But I don’t have to like the way it chooses; nor do I have to refrain from explain why, IF I dislike it, the reason for my dislike.

Justin P April 27, 2011 at 3:03 pm

I think it’s a problem with our society and education. Words lose their meaning when the populace isn’t taught the proper word to use for a situation. More and more words are starting to mean the same thing now a days, when in the past they had precise and often nuanced different meanings. Take Avarice and Greed; two words that mean the same thing to the vast majority of people now, but have had two distinct different meanings in the past.

JohnK April 27, 2011 at 3:16 pm

“More and more words are starting to mean the same thing now a days, when in the past they had precise and often nuanced different meanings.”

Same effect as if words were eliminated, Newspeak style, from the dictionary.
Limit the vocabulary and you limit thought.

ArrowSmith April 27, 2011 at 3:14 pm

Can’t you go back to Disqus? I really hate filling out these name/email fields every time and it’s slower.

Methinks1776 April 27, 2011 at 3:23 pm

Bravo! Well said, as always.

This is a massive peeve of mine. Any communications I receive beseeching me to “give back” or help someone else “give back” I send back with a note telling them that I have nothing to give back since I never took anything. If they ask me in person, I tell them that to their face (I’m not always bitchy about it). The reactions are interesting, but it’s become such a part of the culture that truly well-meaning folks just don’t even think about what they’re saying.

Don Boudreaux April 27, 2011 at 3:29 pm

Thanks for doing that, Methinks. The rhetoric we use is important in shaping the way we, and those with whom we communicate, perceive reality – which is why calling people out on the “give back” meme is vital.

Methinks1776 April 27, 2011 at 3:41 pm

In the same vein, Don, I don’t know if you saw this on Carpe Diem. Maddening.

http://www.mindingthecampus.com/originals/2011/04/_after_spending_four.html

Don Boudreaux April 27, 2011 at 3:48 pm

I did see it and forwarded it to my colleague Walter Williams – who I’m hoping will devote one of his syndicated columns to this idiocy.

SaulOhio April 27, 2011 at 4:05 pm

That explains the level of “debate” when free market ideas are brought up on other forums on the internet. The comments section on that “The Battle is Over Money, Not Philosophy” article on the Huffington Post is a case in point. Or almost any Huffington Post article.

vidyohs April 28, 2011 at 10:15 am

My God, m’lady, reading that link took me back to my youth working on a central Texas ranch. It was like peering into a animal’s wound and seeing a deep depression just filled with teeming squirming screw worms that needed to be eradicated.

Even after attending a meeting of radical domestic terrorist groups at our local St. Thomas U. and hearing their insanity, that bunch in Atlanta set the bar for insanity very damn high.

Slappy McFee April 27, 2011 at 3:47 pm

I guess I don’t understand the downside. Ritz benefits, their customers benefit, whomever they donate to benefits. The only people that suffer are those who choose to fight the ignorance. And “they” sound like “they” are demanding that “something must be done” ala statists.

Just as libertarians tell customers of companies that mistreat them, they always have an option to not go there. The people you should be convincing are the customers of Ritz. Remind them that they are not economically better off because Ritz donates money to “give back”.

From both a libertarian and economic perspective, this transaction falls under the “none of my business” file.

Don Boudreaux April 27, 2011 at 3:50 pm

When I’m asked to support a “give back” campaign such as this one, it becomes my business – at least so much as I’m entitled to respond to it.

Methinks1776 April 27, 2011 at 4:16 pm

Slappy,

There is absolutely nothing wrong with Ritz Carlton’s charitable work.

To me, what’s important is the way “giving back” weaves the lump of wealth fallacy into the culture. This was dreamed up by people who are actively trying to remake mankind and language is but one of their subtle means to that end. I rebel against it. I think there’s value to returning meaning to words.

To help our fellow man in need is virtuous, IMO. To harp on giving people back something you never took from them is garbage. I don’t think giving people the opportunity to think about what they’re saying is a waste of time. Try it. You’ll be surprised how many people are willing to actually think about it when the opportunity presents itself.

Slappy McFee April 27, 2011 at 4:23 pm

Well, now I understand your (and possibly Don’s) point of view. I still stand that telling Ritz (because they stand to benefit from the misuse of the language) is the wrong approach as the only way it will ever stop is if the populace stops falling for such ruses.

Methinks1776 April 27, 2011 at 4:31 pm

Slappy,

There’s still value in giving the employees the opportunity to think about it and it does tell the Ritz Carlton that they are turning off some potential donors.

RC is not benefiting from the “give back” language. It is benefiting from the charity work. I doubt it will lose any donors if the company simply ask people to donate. Knowing that they are losing donations (thus, making their charity-based marketing campaign less effective) is valuable information for them.

Slappy McFee April 27, 2011 at 4:51 pm

Am I misreading the post? Isn’t Ritz-Carlton doing both the “give-back” campaign AND doing the donating? Don has already acknowledged that is is a marketing campaign that RC is hoping to benefit from. The incentives are there for RC and other companies to continue the misuse of the language. Target Corp has been using its “5% back to schools” as a marketing gimmick for a decade, and people jump at the oppotunity to fall for it. As long as people are willing to trade with companies, based on “giving back”, the companies will continue to do so. RC and its employees would get a much larger message if people stopped shopping during their “give-back” ruse.

vidyohs April 28, 2011 at 9:53 am

Of course I agree with you.

However, I think this from yourself and methinks is interesting and it makes me wonder why, if the two of you are so devoted to countering the meme, you still use the term progressive(s) in referring to themselves or to the looney left in general, and you allow them to use it unchallenged.

I pointed out this problem of language a couple of years ago, prior to the 2008 election. I believe I have pointed out many times that the looney left is given the privilege to label whatever, whenever, and whomever they choose and have their label taken up and cemented in the public discourse by the MSM. That leaves we in opposition to always play catch-up in the debate.

Anytime I read or hear someone use the term progressive, if possible in anyway, I immediately counter that by pointing out that the correct label is regressive, as everything they put forth will take us backwards to failed policies and practices.

Can we believe that this now expressed devotion to destroying the meme will translate into a more aggressive confrontational stance regarding the lies of the looney left? If so that would be truly progressive of you.

vidyohs April 28, 2011 at 11:28 am

Speaking of memes that need to be destroyed, how can anyone listen to a person say, “I’m a fiscal conservative, but a social liberal”, and not gag on the hypocrisy. How can that be spoken in public and not be challenged?

JohnK April 28, 2011 at 11:39 am

I suppose that depends on what someone means by social liberal.

If by social liberal one means income redistribution and creating “rights” out of thin air, then I agree that such a statement is hypocritical.

If by social liberal one means ending prohibitions of voluntary activity such as drug use, gambling and prostitution, then I do not see any hypocrisy.

vidyohs April 28, 2011 at 1:08 pm

@JohnK,

I don’t think we are going to find many people who still know and understand what is meant by the term classical liberal, so I believe it is okay to accept that, in the context I wrote of, when a person calls himself a social liberal he is saying he supports and promotes wealth redistribution via social programs. Of course he does not say he supports and promotes wealth redistribution because actually saying the truth and facing the truth is not something the social liberal is going to do; however, there is nothing else in modern lingo that the term social liberal can mean.

A fiscal conservative would not agree to spending money on social programs.

Gagging hypocrisy.

JohnK April 28, 2011 at 1:13 pm

compassionate conservative = anti-abortion liberal

crossofcrimson April 28, 2011 at 2:20 pm

“when a person calls himself a social liberal he is saying he supports and promotes wealth redistribution via social programs”

I don’t think that’s what people mean when they say that at all. At least for as long as I’ve been around, saying that you’re fiscally/economically conservative and socially liberal is a way to explain libertarianism to someone who has never entertained the concept. The idea of socially liberal conveying support for “wealth redistribution” would negate the first distinction. If you are socially liberal and support redistribution then you’re economically/financially liberal as well (to that extent). At that point they could just say “liberal”.

Anotherphil April 30, 2011 at 4:50 pm

This is also a massive pet peeve of mine.

However, I don’t think there’s anything “well meaning” about it. Its a way (especially large and/or conspicuous) employers got to shake down their employees to get peace with the barbarians at the gate.

Of course, it wasn’t all bad as United Way and other such organizations that favor the “give back” language would install senior executives (or spouses) on their boards and committees thus extending said individual’s influence in “the community”.

I worked at an employer that was famous for including consideration of employees’ (above the supervisor level) meeting “fair share” contributions in performance evaluations or eligibility for promotion. Those that didn’t meet the arbitrary shakedown “guidelines” were “spoken to” about their “contributions”.

These arrangements were nothing but shakedowns by the management and parasites against individual employees.

Martin Brock April 27, 2011 at 3:41 pm

A profit represents the value of an organization of resources over the same resources unorganized; however, a corporative state can entitle a particular organization to monopoly rents. In this case, the “profit” exists only because a statutory monopoly excludes competition, so the profitable organization, without the monopoly, isn’t necessarily more valuable than the same resources unorganized or organized differently.

Don’s assertion is true if monopoly rents do not exist, but monopoly rents do exist, and we don’t always call them “dishonest deals” or “theft”. Maybe we should, but we don’t. Since we don’t, the fact needs continual reiteration.

In reality, monopoly rents are common, and big businesses like the Marriott Corp. receive many of them. How many times has Barack Obama stayed at a Marriott? Hillary Clinton? All Federal employees? All Federal employees and contractors? All state employees at every level and contractors? These numbers only scratch the surface of the largess of the corporative state.

So does Marriott Corp. have anything to “give back”? Of course, it does. So do Lockheed Martin and countless other “private sector” businesses. Let’s not kid ourselves. We don’t live in a free market utopia, far from it.

Gordon Richens April 27, 2011 at 5:15 pm

So perhaps “Let’s Not Take It In The First Place Getaways” would be a more suitable promotion.

Martin Brock April 28, 2011 at 10:12 am

Don’t hold your breath.

Methinks1776 April 27, 2011 at 11:40 pm

We don’t live in a free market utopia,

What’s that? I’ve never heard of a Free Market Utopia.

Martin Brock April 28, 2011 at 10:03 am

It’s a place we don’t live in.

For the uninitiated, a “utopia” is an imaginary place characterized by universal adherence to a hypothetical system of rules that particular idealists favor. Rothbard’s anarcho-capitalist economy/society is an example. I’m not dissing Rothbard or his idealism here. I’m only noting that it’s idealistic.

Martin Brock April 28, 2011 at 10:11 am

Don is also an idealist. I’m not dissing his idealism either. I’m only emphasizing its limitations as a description of reality. When we pretend that our ideals govern reality when they don’t, we invite the sort of response that muirgeo offers here.

The next time Marriott Corp. profits from some corporative statism to the detriment of less influential political constituencies, muirgeo will blame it all on Don’s “free market”. After all, Don suggests here that Marriott’s profits are fine and dandy.

We should always distinguish reality from our ideals. Muirgeo can then accuse us of idealism instead. That’s fine. We are idealistic reformers in fact.

Methinks1776 April 28, 2011 at 9:05 pm

Martin, I am completely unfamiliar with Rothbard. Thanks for the explanation.

I also think that the answer to the problem of rents you describe is to eliminate the rents, not to teach people a perverted version of capitalism. Marriott’s profits are fine and dandy. It’s rent seeking you oppose.

vikingvista April 30, 2011 at 8:52 pm

Give Rothbard a read. Describing alternatives to existing institutions necessarily seems idealistic to those who don’t know better. Rothbard definitely had the real world in mind, and certainly understood the real world better than most of his critics. There are reasonable criticisms of Rothbard, but calling him an idealist is absurd.

Frank33328 April 27, 2011 at 5:07 pm

My personal favorite “give back” is the requirement in my state for High School students to provide 40 hours of slave labor, err… that is, voluntary time to the community. When I call it the slave-labor requirement for graduation, I am always reminded that it “teaches the students to ‘give back’ to the community because…” wait for it, “their education is FREE.”

When an adult makes the above statement I ask them if they would like to see my property taxes, sales tax, etc. for the past 25 years and still dare to call it free. When a student (like unfortunately my own daughter) makes the statement I warn them that they will be paying for that “free” education for the rest of their lives.

WhiskeyJim April 27, 2011 at 7:12 pm

As I neared MBA graduation, I was interviewed by a number of banks who asked me for records of my involvement in charities, since it was a critical component of their community involvement.

I responded to all of them in the same way. First, it was my personal opinion that my charitable contributions, including a great deal of time, must remain private or risk losing its efficacy in a torrent of confusion regarding its purpose.

Second, I would be more than happy to become involved in their advertising and marketing efforts in the community to improve their brand, if that was an employment requirement. I received no offers from those banks.

Ironically, I eventually came to work at a very large company that required its executives to give portions of their salary to well known charities in a way that enhanced the company’s name. The company could not force the giving, but non-participants received multiple phone calls and that information was only semi-private. I believe the practice de-motivated as many employees as it motivated.

Methinks1776 April 27, 2011 at 11:43 pm

Banks, you say. Would those be the same ones that in 2008 took back everything they “gave back”?

WhiskeyJim April 28, 2011 at 12:38 am

Actually, they were both heavily involved:)

It was also my impression the one interviewer was more offended that I wished to keep my giving private and not brag about it, then that I implied their giving was really just advertising. I am still a little confused about that.

Anotherphil April 30, 2011 at 5:06 pm

You have to remember to be a bank is to routinely submit to shakedowns-starting with the Community Reinvestment Act. Its just a cost of doing business to pay tribute.

jcpederson April 27, 2011 at 7:47 pm

I’m not saying I disagree with the general thrust, but let me play hippie’s advocate for a minute here:

The community allows someone to start a business, serve customers, and get wealthy. The customers are happy, the employees are happy, and the government is content that regulations are being kept, and tax revenues are being collected.

But there are problems with the community. Maybe it’s illiteracy, addiction, wildfires, and it’s making people suffer a lot. The government, if they’re smart enough to realize they’re not smart enough to face it all on their own, looks to People Who Have Their Act Together, and that includes big business proprietors. One might say the more one has gained from a community, the more expectantly the community might look to them for help. It’s not that the business made them worse, necessarily, it’s just that relative to the norm, the business is ahead.

The proprietors who give a press conference and say ‘we made a pile from people in the community, but now that the community is in need, we’re going to step over the bodies and go home, we’ll be back open on Monday to meet your widget needs’ is going to be seen as being rather cold-blooded, at best.

The business is more than a this-for-this-much entity; it is part of the community. It makes use of people who have received training and shelter from the community, and the business has a proportionate duty to maintain, and perhaps improve, this community that it derives much benefit from.

Dr. T April 27, 2011 at 8:44 pm

You start with a wrong premise — “The community allows someone to start a business” — and go downhill from there. The belief that starting a business requires community consent is antithetical to a free market. Unless you live under a communist or communitarian government, the community doesn’t own all the resources, lands, and wealth. They mostly are owned by individuals and businesses that have the right to use their property and resources to grow crops, build houses, or erect buildings. The community may buy your crops, visit your home, work at or be a customer of your business, but that doesn’t make you indebted to the community and it doesn’t obligate you to provide charity.

Mao_Dung April 27, 2011 at 8:55 pm

I reject your exploitative libertarian view that “There is no such thing as corporate social responsibility.” We as a society must demand that you have a social conscious and not just be a money printing press. It’s not all about you, Ayn Rand.

Dr. T April 27, 2011 at 9:06 pm

Who is being exploited when a business hires workers, produces a product or provides a service that people want, makes a profit, and distributes the profit among those who invested money to help build the business? Were the workers exploited? The customers? The shareholders? Or just people such as you who feel entitled to grab a share of everyone else’s wealth? It is you and those like you who are the exploiters.

Mao_Dung April 27, 2011 at 9:28 pm

The Shareholders, per se, are of no interest to me. They need to get a job if they don’t like having their profits reduced by a corporate tax. Or they can join the Teaparty, which many have if they don’t want to pay their fair share. I reject them as useful tools.

Randy April 28, 2011 at 6:13 am

Well said, Dr. T.

MD, I admire your openness about your desire to exploit those who produce. I give you credit for being an honest politician. Of course I despise politicians, but at least you’re honest.

crossofcrimson April 28, 2011 at 2:32 pm

“The Shareholders, per se, are of no interest to me.”

For someone pretending to care about people you don’t mind appearing to callous. Screw all those old people with maturing investments I guess.

“They need to get a job if they don’t like having their profits reduced”

They did have a job – providing laborers with the capital to augment their labor and bolster productivity. As far as I know, no one is forcing labor into that arrangement. If you want to try to make cars in your back yard, go for it.

“reduced by a corporate tax. ”

And you think that laborers and customers aren’t saddled with the burden of a corporate tax? I think someone needs to study tax incidence a little more closely.

“which many have if they don’t want to pay their fair share”

What “fair share”?

Here, let me try. I lament you for not paying your “fair share” to me. I’m just going to tuck the premise of obligation into my attacks so that I don’t even have to explain where they come from. You owe me a car….because that’s your “fair share”….I said so.

dan April 30, 2011 at 5:16 pm

The Shareholdes, investors are of ‘no interest’. So, the individuals who are responsible for the business exsiting are of no interest. The ones responsible for ‘workers’ having a job, are of no interest? I see why you are Mao.

crossofcrimson April 28, 2011 at 2:25 pm

“We as a society must demand that you have a social conscious”

Translation:

My personal moral obligations override your liberty. I will use or threaten to use violence against you for not adopting said morality.

Mao_Dung April 28, 2011 at 4:58 pm

Stop following me around, troll. I would call you worse, but I don’t want to inflame a troll, or abuse this blog.

Mao_Dung April 28, 2011 at 5:03 pm

Girls volleyball coach about says it all about you.

Mao_Dung April 28, 2011 at 5:16 pm

P.S. I hope I can tick you off in the future. Now back to your girls volleyball game.

jcpederson April 28, 2011 at 1:22 pm

I understand where you are coming from, but how would you better frame the setup, when you need a building permit to build, a business license to set up shop in a place that complies with zoning laws, and when you have regular visits from the fire department and the health department to make sure your facility is clean and safe, in order to keep operating?

Dr. T April 28, 2011 at 6:44 pm

Many politicians and government bureaucrats apply the same poor premise as Mao_Dung: they believe that governments should control what people and businesses do with their own property and resources. But, just because a restauranteur needs zoning approval, a building permit, building inspection, restaurant permit, liquor license, and annual safety and health inspections from local and state government agencies doesn’t mean that he owes anything to the community. Yes, the community has “allowed” him to build and run a restaurant, but the proper response from the restaurant owner is to fight to reduce the red tape, not to feel obligated to the community that increased his building and operating costs and reduced his profits.

vidyohs April 28, 2011 at 11:10 am

Sir,
The only people who can accept your alternate scenario as having validity would be the people who do not understand that no business gets its money as gifts from customers or clients, there is a quid pro quo in which the business provides a product or service to “earn” the money.

That break even on the deal is exactly what Don was highlighting in his post above. A business can’t “give back” because it never “took”.

jcpederson April 28, 2011 at 1:37 pm

I’m right there with you and Don on the semantics, but I guess I wanted to further press on the concept behind it.

Ask a cold economist how to select a community in which to start a business, and he will tell you to look for demand, and look for economical ways to get your inputs supplied.

But if you come back later to this cold economist and ask him how to best help the community become more vibrant, and a better place to do business, and he might say “Who cares? This community is used up. Sell your shop, and let’s go back over question #1 again.”. Insofar as communities rise and fall because of a lot of factors, and maybe the business is not responsible for any of them, is it really practical for all businesses to take the Rand path?

vidyohs April 28, 2011 at 2:54 pm

Perhaps water and a well run business rightly share a common characteristic.

Water naturally takes the path of least resistance, and a well run business naturally takes the path of maximum profitability.

I am not a trained economist, so I can not speak to what a cold economist might say or do. All I know about the subject of economics is what I need to operate my business successfully, and that level of economics is available on the street if one pays attention. Re: the speculation in your last paragraph, I think most businessmen instinctively understand that their business is best served by being in or near healthy vibrant communities and will accordingly act to contribute in a myriad of ways to ensure that health, after all to purchase goods and services people need some means of earning a consistent income. That level of understanding doesn’t require a college education.

But, we stray from the “giving back” what was never taken discussion.

jcpederson April 28, 2011 at 3:25 pm

I imagine it is a bit of a balancing act, working with your own chamber of commerce, and taking exploratory meetings with other cities..

dan April 30, 2011 at 5:13 pm

A business doe not need coercion from a govt authority to be charitable. Most will do so for good PR and do so to maintain a good customer base. The coercion from govt is so that the official can lay claim to the good will and for govt, giving 100% of revenue is not enough. What part has the reciever of the good will done to enhance the community?

Mao_Dung April 27, 2011 at 8:27 pm

I reject your “hippie” view of corporate social responsibility. Corporations that make a lot of money need to be taxed progressively so that their profits become normalized. If oil companies are making exorbitant profits while Joe Blow is pay over $4 for a gallon of gas, then something is out of whack. They can reduce their profits just as an individual can by paying their employees more and by making donations to the the community in which they thrive. I don’t view donations to improve the society in cynical marketing terms. Libertarians are the jaded losers who do that all the time. I’m talking about paying employees more from the bottom up, not from the CEO down. The company can also retain earnings for R and D, expansion, etc. Of course, we, the people, can always nationalize all or part of a bad corporation, instead of bailing them out like has been done recently. We can also demand that corporations act in society’s long-term interest, and not in their own greedy short-term interest. Corporations are NOT charitable outfits, unless that is their modus operandi.

Dr. T April 27, 2011 at 8:59 pm

When you slap a high tax on a corporation, who do you think pays? The corporation doesn’t absorb the tax; it raises prices on its goods and services so that its customers pay the tax. If the tax is so large that it cannot be fully passed on to the customers, then profits fall, dividends plummet, stock values decrease, and shareholders become less wealthy and therefore pay less taxes. Net tax revenues fall, and successful corporations make no more profit than mediocre corporations — hardly desirable outcomes.

Also, the concept of “normalizing” profits is absurd. It punishes successful corporations and encourages wasteful corporate spending to keep profits below whatever cutoff the bureaucrats deem acceptable. Risky ventures will no longer get funded, because there would never be the possibility of big profits to compensate for the high risk.

Corporations should NOT be distributing profits to charities. Profits should be invested or distributed to shareholders. The shareholders can decide how much they will give to their preferred charities.

Mao_Dung April 27, 2011 at 9:10 pm

I reject everything you believe in and stand for. You’d like to see no corporate tax, and I’d like to see a fair one. I’m right and you’re wrong.

crossofcrimson April 28, 2011 at 2:34 pm

“You’d like to see no corporate tax, and I’d like to see a fair one.”

Translation:

I want to tax the rich, but my class-warfare mentality has blinded me so spectacularly that I can’t see that I’m increasing the burden on those I’m trying to help.

Mao_Dung April 27, 2011 at 9:13 pm
Jason April 27, 2011 at 9:27 pm

When the price per gallon fell a couple of years ago, are you saying it’s because the oil companies no longer wanted “exorbitant profits?”

Mao_Dung April 27, 2011 at 9:39 pm

Look Jason, I know you’ve taken the libertarian bait, but seriously you have to cough up the hook. Capitalism is BROKEN in this country when a CEO can walk away with a $210,000,000 severance package.

http://money.cnn.com/2007/01/03/news/companies/home_depot/index.htm

crossofcrimson April 28, 2011 at 2:36 pm

I’m glad you answered his question so succinctly. For a second, I thought you were capable of thinking but then you….Oh….wait a minute….

crossofcrimson April 28, 2011 at 2:37 pm

“Capitalism is BROKEN in this country when a CEO can walk away with a $210,000,000 severance package.”

Sand-castle building is broken when I can only make one an hour and you can make ten!!!

Such a child…

LAD April 27, 2011 at 8:27 pm

Profits and wages are a measure of how well we serve others. Bill Gates directly and indirectly improved the lives of every person in the world. Even though Mr. Gates earned billions over the years, he was only able to capture a small portion of the benefits for himself. Those with the “give back” mentality demean the years when Gates was earning money, but praise his recent philanthropy. Service to others is laudable even when the service provider captures some of the benefit.

Mao_Dung April 27, 2011 at 8:38 pm

Bill Gates doesn’t need you to be his cheerleader unless he is paying you to do so. Why do you work for him for free?

LAD April 27, 2011 at 9:11 pm

I have enjoyed thousands of dollars of consumer surplus thanks to Mr. Gates. Cheerfully acknowledging it is the least I can do.

Mao_Dung April 27, 2011 at 9:15 pm

You can do more if you try harder.

crossofcrimson April 28, 2011 at 2:38 pm

“Why do you work for him for free?”

You mean like you expect the “wealthy” to do for the “poor”?

tms April 27, 2011 at 8:41 pm

“Have you taken something that doesn’t belong to you? If so, by all means give it back! ” That is hilarious. Thank you.

muirgeo April 27, 2011 at 8:42 pm

So Professor which one did you sign up for?

The Keeping Atlanta Green with Trees Atlanta or Supporting Sea Turtle 911?

Philo April 27, 2011 at 11:12 pm

Did you mean, “Give if your shareholders approve *unanimously*”? It sounded more like, “Give if a *majority* of your shareholders approve,” which looks like tyranny exercised by the majority over the hapless minority.

Methinks1776 April 27, 2011 at 11:20 pm

No tyranny. Becoming a shareholder is completely voluntary. If shareholders are unhappy, they need only submit a sell order to their broker. In fact, management needn’t ask shareholder approval for charitable giving at all.

Ruthie O'Donnell April 28, 2011 at 12:02 am

Perhaps their sentiment is that of customer appreciation; meaning that they believe their customers/community have given them much in terms of business, and they simply want to “give back” something equivalent to what was “gifted” to them. They don’t say “give back” because they have taken anything, but because they have received something.

If someone does a nice thing for me, I don’t feel as though I have taken it, or that I am undeserving, but I appreciate it, and if it is in my power and ability to “return a favor”, I might find it worthwhile to do so. Maintaining friendships through kindness is a nice thing, and perhaps even “self-interested”, if I want to speak like an econ major ;)

Methinks1776 April 28, 2011 at 12:22 am

Ruthie, did you patronize those businesses because you felt like you were doing them a favour or you were giving them a gift or was it because you were getting something you valued in return for the money you forked over to them? Do you generally consider your patronage of various businesses charity work?

There just comes a time when we need to stop deceiving ourselves that horseshit is chocolate so that it’s easier to swallow.

Ruthie O'Donnell May 8, 2011 at 4:58 pm

I suppose using someone doing something nice for me wasn’t an accurate comparison.

What I was trying to say is that when business say “give back”, they don’t say it because they believe they have taken anything, they do however appreciate business, and if it is within their means to show appreciation to their customers, they desire to do so (altruistically or not).

Also, would you kiss your mother with that mouth?

Mao_Dung April 28, 2011 at 4:37 am

Ruthie,
Businessmen (they’re still mostly while men at the top) are not interested in joining your social club and tea parties (forgive the allusion). You are talking about people who are ruthless and would squash you like a bug to suck the blood out of you if they have to. These are not nice people. They don’t want to be your friend or care about your appreciation. They want your money, your house, your car, your food, so that they can have more than anyone else on earth. Their greed is insatiable. Sorry to burst your bubble.

Rich Berger April 28, 2011 at 10:02 am

I guess you wrote the book on ruthlessness. What was the death toll? 30, 40, 50 million?

Harold Cockerill April 28, 2011 at 6:35 pm

Closer to 200 million.

vidyohs April 28, 2011 at 11:21 am

Cao Dung,

I won’t ask you how you miss so much of life, the answer is pretty evident…….you’re just plain looney…….as in looney leftie…regressive for sure.

I would imagine your ancestor of some 55,000 years ago was bitching about his neighbor Og being more successful at hunting because of his superior spear, and accusing Og of exploiting the tribe because he was more successful and brought more to the table than the rest. I know that is convoluted but I’ve learned that that is the way your broken brain processes things.

crossofcrimson April 28, 2011 at 2:42 pm

“would squash you like a bug to suck the blood out of you if they have to”

Probably the most tragic thing about believers in conspiracies (politically, economically, or otherwise) is that they spend so much time warning about the presumed bad intentions of others and then push violence on peaceful people to solve it. Consistency is not in their lexicon.

vidyohs April 28, 2011 at 11:18 am

Ruthie,
How do people like you miss so much of life? And, not just so much of life, but the single most important thing you do, which is business – the actions you take to provide for you and yours. To paraphrase methinks, “do you actually believe that when you rent a room in a Ritz Carlton that you are gifting them with your money and you are receiving nothing of equal value in return?”

If so, why did you plunk your money down?

Matt N April 28, 2011 at 9:17 am

Fantastic! I was just chastising my wife for using this same terminology — she wanted to do some charitable work to ‘give back’, and I said, ‘Give back? Do you owe somebody something?’ Then, in a bit of serendipity, I stumbled upon this piece which made the case much more eloquently then I could.

I’ll just add that to me the language not only adds to — or at least supports — the ‘businesses are evil and must make amends’ mentality, but it also detracts from correctly ascribing benevolence to individuals who commit charitable acts. That is, ‘giving back’ implies something was owed, and if something was owed then the act was not charitable or benevolent — it was simply what was expected and required of them. If that’s the case, can there be any acts that are ‘good’? Is it possible for people to do ‘good’ if the language is defined that way? Is it insulting or at least disrespectful of people who do charitable work to suggest that what they are doing isn’t altruistic but is instead simply paying back what they owe?

Frankly, there’s something depressing about living in a world where — semantic or not — the quality of human interactions with other humans ranges only from ‘meeting ones obligations’ to ‘thievery’ and worse.

Shangwen April 28, 2011 at 10:38 am

Hilarious! I nominate Don Boudreaux as Honorary Lifetime President of the Social Outliers Society. I’ll buy a full membership myself.

Ryan Vann April 28, 2011 at 1:45 pm

Knowing the history of organized crime, I wouldn’t be shocked if Ritz hasn’t received a boat load of ill gotten funds over the years; so, maybe it is a guilty conscience about that.

Harold Cockerill April 28, 2011 at 6:37 pm

and who hasn’t had a dollar bill dusted with coke?

Harold Cockerill April 28, 2011 at 6:38 pm

especially the brand new ones from the Fed.

Ryan Vann April 29, 2011 at 1:54 pm

Haha, fair enough, though I think the Ritz might have seen a disproportional amount of coke dollars.

Harold Cockerill April 28, 2011 at 6:41 pm

How about we boil Mao and Muirgeo (figuratively, please) down to basics.

Property is theft. Viva Che.

Todd Johnson April 28, 2011 at 9:49 pm

The former coach of Ohio State, Woody Hayes, used to say that you can’t pay back, you can only pay forward. What he meant by that was that as you go through life people and institutions often help you above and beyond the call of duty. In most cases, you can’t return the favor (pay them back), but you can return the favor by helping someone else (paying forward). There are many ways to interpret “giving back” and I agree that in most cases it is not that you owe anything, but that none-the-less you feel a gratitude that deserves a recognition.

On the other hand, I think many companies really do have a debt to pay society. Unless the price of companies product includes the total cost of production and consumption, that company is profiting at someone else’s expense. This happens largely in two ways: (1) by taking advantage of favorable government stimulus and regulations; and (2) through externalizing costs, such as manufacturing products in ways that pollute and shift the cost of that pollution to others in lost productivity (unhealthy people and environment) or other extra expenses.

Real prosperity comes only when companies and organizations create shared value, where the company, the employees, the customer, and future generations get more benefits than harm. Unfortunately, the free market to date has largely focused on short-term gain–a focus that leads to short-term profit over shared value. Short-term profit works best if you externalize as much of the cost as possible, but in the long run this is very destructive. We’ve seen this with mortgages, CDO’s, tainted toys from China, and so on.

Our best hope is that the interconnectedness of the world (largely through the internet) will force companies to stop externalizing costs, thereby causing their products to be priced accordingly.

I understand why people are wary of the government, but there is plenty of proof that we should be wary of a completely free market as well. In an ideal world libertarianism and communism would work, but we are not in an ideal world, because people and world are not perfect. The end result is that we need a balanced approach. Unfortunately, we have not yet found that balance and our politicians and most of the public seem so intent on pushing for extreme, idealistic views that I doubt we have much of a chance of finding something that actually works.

Not Sure April 28, 2011 at 11:25 pm

“On the other hand, I think many companies really do have a debt to pay society. Unless the price of companies product includes the total cost of production and consumption, that company is profiting at someone else’s expense. This happens largely in two ways: (1) by taking advantage of favorable government stimulus and regulations…”

There is no doubt that companies do that (take advantage of favorable government stimulus and regulations), but the fact they are arranging their affairs so as to best advantage themselves based on government rules and regulations is in no way a failure of the free market, you know.

So- if government interference in markets with rules and regulations allows for profiting by businesses, the obvious solution is… more government rules.

Right?

Mao_Dung April 28, 2011 at 11:36 pm

No, wrong. Laws can provide a framework, but can’t cover every possible contingency nor do we want to have onerous laws. We have to rely on companies, just like individuals, to “do the right thing.”

Also, just because a corporation is owned by shareholders, who want to make a profit, doesn’t mean that a corporation is suddenly amoral, and only in “it” for the money. That’s wrong, too.

Not Sure April 29, 2011 at 12:18 am

“nor do we want to have onerous laws.”

Too late for that, I’m afraid.

corey kemp April 29, 2011 at 7:38 am

I think you have made a great choice. Go online and look at the one you made your reservation at. I bet it will have beauitful pictures.
http://www.healthproductreviewers.com/skinny-fiber-review.html

Colin Fraser April 29, 2011 at 10:26 pm

Let me play hippy’s advocate from a related but slightly different angle.

Ritz-Carlton is the beneficiary of a number of actions taken by other people: the recognition of property rights, rule of law, the decision of people to hold and use cash rather than goats, the fact that people choose to speak English or some other major language rather than an obscure one that would prevent them from interacting with Ritz Carlton, the fact that most people choose not to deficate outside the front entrance of their hotel, to name a few. While all of these actions are taken by utility-and-or-profit-maximizing agents for their own personal selfish reasons, there are spillover benefits to the Ritz-Carlton and others — the Ritz-Carlton benefit from a number of positive externalities. After performing the appropriate calculations, Ritz-Carlton realizes that it would be profit-maximizing to pay a Coasian side-payment (or, in other words, to give back) out of the excess surplus afforded to it by the positive externality. Anticipating that the average Ritz-Carlton patron may be unfamiliar with the work of Coase, they elect not to call the campaign “Coasian side-payment getaways”.

Colin Fraser April 29, 2011 at 10:31 pm

And on the semantics of “giving back”, I don’t believe that there is necessarily an implication that anything is “owed”. If you give me a book — that is, if you transfer ownership of a book to me — and I decide to then transfer ownership back to you, I did not owe the book to you, but I still gave it back.

Previous post:

Next post: