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Colloquy: Not-For-Profits Are Not Inherently Virtuous and “Giving Back” Is A Stupid Term

[This is a colloquy between myself and a  friend of mine.  Italics are her; regular text is me.  She is responding initially to a comment I had made about “evil not-for-profits.”]

I don’t understand, but without the rhetoric, I really want to see the world through your eyes regarding your comment about “evil not-for-profit…” How is it that people who sacrifice so much for others are evil? I’m a corporate attorney and admire the heck out of people able to do something I’m too greedy to do. While they walk the walk (of spiritual leaders, etc.), I’m just a coward saving money for my own kids’ education, etc. How are they “evil”?

Mostly it’s a joke, meant to highlight the absurdity of classifying a businessman as inherently evil. But, given that you ask, here are some thoughts:

1) What makes you think people who work for “not-for-profit” entities “sacrifice so much for others”? That may be true for some, a very few. Let’s say, for example, Mother Teresa’s Missionaries of Charity. But generally, that’s not true at all, or there is no evidence I can think of for it.

2) Many not-for-profit entities accomplish worthwhile things. Many, especially those of a political bent, are a huge social net negative. There is no necessary correlation between “not-for-profit” and “good for society.” The implicit belief that there is, is a gross error. It is entirely possible that if not-for-profits disappeared today, society would be vastly better off.

3) People who are productive of economic benefits for themselves and others are not therefore “greedy” relative to people who are not productive of economic benefits. We would all be living in huts without antibiotics if nobody focused on economic benefits. And, of course, plenty of people working for not-for-profits are very greedy.

Moreover, “not for profit” in many cases does not mean “poorly paid.” It instead often means “paying people high salaries for work performance that would get them fired in the real world, and wasting huge amounts of money because we’re not disciplined by normal market principles.” Not-for-profit employees are frequently paid more in cash for their talents than they would be in the “real world,” since many would be unable to get jobs paying them even as much as their not-for-profit job. A Gender Studies degree has less than zero value in the real world. If the individual with it cannot provide other value, he has no choice but to work at a job that is not in the real world. Here, the greedy person is the person accepting a higher value for his labor than it is justly valued at.

3) By definition, anybody working for a not-for-profit does it in order to maximize their own personal utility. For example, ____________ left working for _________to work for ___________. He did this, I’m certain, because it’s what he wanted to do, not because he didn’t want to do it. He chose the balance. That doesn’t make his choice automatically superior in any way to choosing to be a corporate attorney.

This is not to say that all choices are equally valid. Many attorneys, like many not-for-profit workers, are social parasites and net social negatives. But that is a different question than WHY people choose their careers. And they don’t choose them because they’re “sacrificing.” They choose them because their choices maximize their own personal utility. They may, for example, get more utility by waking up in the morning thinking they’re making a difference, rather than waking up in the morning to view their Lamborghini.

But, of course, there are in fact many economic benefits to individuals working for not-for-profits. For example, in one of the many recent pernicious developments in our society, all student loans are now federalized, and forgiven if the debtor works for the government or a not-for-profit. The idea that somehow people should be automatically rewarded for that, rather than for adding value to society, is bizarre. (Doubtless there are a few people who work for government who add value to society, but very few. Most government workers are parasites and net social negatives. Value to society for not-for-profits is probably less clear, especially if you include hospitals and so forth, but there is no reason to say that they are automatically social positives, as shown elsewhere in this analysis. And in any case, why should the rest of us pay for the education of people just because they get a job that has less economic value? Why should I pay for some social justice warrior to get a degree in Gender Studies and then work for some militant not-for-profit?)

Other economic benefits include, in many cases, hugely increased time flexibility and free time; job security; and other government handouts due to lower income.

Related to this is the odious phrase “giving back.” As a businessman, I give every day. The very fact I operate a business is a gift to society, in the sense it improves society overall (as well as the lives of numerous individuals), because businesses can (though not necessarily do) produce value. By “value” I mean create value that would otherwise not exist. This is a concept that for some reason is oddly ignored in the modern world. If it were not for people producing things, nobody would have anything. The ONLY thing that allows people to live, and can increase their standard of living over time, is production of new value. Many people in the world produce no value; they merely consume. Those who produce value give every day. Others are able to exist only by the efforts of those who produce value from nothing.

If I choose to take the economic value I have created and distribute it to others, in the form, for example, of charitable donations, that is “giving additional,” not “giving back.”

“Giving back” implies that the person giving charity took something. In reality, it is the person receiving charity who is taking something. That is as it should be–some recipients of charity SHOULD be the recipients of charity (though the correct distinction between the deserving and undeserving poor should be revived and rigorously maintained). But those giving did not, in almost all cases, take anything at all; they merely produced value where none existed before.

Now, not all businesses produce value. Any business that is a transactions cost may not produce value. For example, some lawyers produce no value; they are merely a tax on the productive (most personal injury lawyers). Others do produce value, by increasing the efficiency of transactions (some corporate lawyers). Others produce value, but only because of some external inefficiency unjustly imposed from above (lawyers who help clients comply with unnecessary regulations). Similarly, a business that merely accepts money from the government taken from those who produce, in order not to create value but because they perform some unproductive function favored by the government, does not produce value. And a business that receives payment for services not because they are the best but because they have some demographic characteristic favored by the powerful may produce value, but less overall than if the money were directed in a rational fashion.

It is not to the contrary, pace Elizabeth Warren, that those who produce value may use in their efforts infrastructure or other common elements available in general to members of society. First, that those exist is only because the value providers (who do not include Elizabeth Warren) made them possible. Second, anyone can use those common elements; that some do so to produce value and others do not shows the deficiency of the latter group, not the former group.

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