David Shemano wrote: > You did not answer the question, at least not to my satisfaction. What > prompted my question was your statement that "Profit-seeking companies have > an incentive to dump costs on others (externalize internal costs, pollute) > and to capture external benefits." That statement implies that > not-for-profit companies have different incentives.
No it doesn't. The proposition that "X implies Y" does not say that "not-X _never_ implies Y" or that "not-X _always_ implies not-Y." It is quite possible for both X and not-X to imply Y under some circumstances, even if not-X sometimes implies not-Y. (X = profit-seeking, Y = cost-dumping.) For those who like Venn diagrams, even if the Y set totally includes the X set (as I asserted), that does not mean that the two sets are identical, totally excluding not-X from the Y set. (I've forgotten the name of the logical fallacy that David falls for here.) > You now say that "a not-for-profit organization is less likely than a > profit-seeking one to be _aggressive_ in corrupting the environmental > protection agencies, evading the law, and especially moving its operations to > another country to get away from government regulations. That's because > not-for-profits are not set up to be engines of endless accumulation of power > (as I said in my previous message)." > But why? Corporation A makes widgets and distributes profits to > shareholders. Corporation B makes widgets and distributes profits to > charitable organizations. Why does corp. A have different incentives than > corp. B regarding externalities? < There's a big difference between individual actions (the use of profits in different cases) and the social and legal framework in which organizations operate. An organization that is chartered to dedicate its surplus to charitable goals and is regularly audited and requires accreditation to continue its operations (and to reap more charitable donations) is different from one that is chartered to aggressively accumulate profits and is punished by financial markets only when it doesn't pursue this goal. The stock market rewards a profit-seeking corporation that rewards its C-level suits with Brobdingnagian rewards as long as the dividends paid and/or capital gains reaped justify that pay. On the other hand, if the Cancer Society is rewarding its execs in that way, it clearly goes against its mission. To some extent, the execs can justify their high pay by reference to their successful fund-raising efforts, but there are clearly diminishing returns. Ethical considerations discourage people from donating to Brobdingnagian not-for-profits (unless, somehow, the execs can reap these rewards in secret). > Again, you appear to fall back not on the institution itself, but on the > psychological and social development of the decision makers, but if you have > proper psychological and social development of the decision makers, why does > the institution matter?< I wasn't falling back on psychology or sociology; instead, it's the institution that counts. In terms of psychology and sociology, I was referring to two mutually-reinforcing roles that institutions play. First, a corporate hierarchy (for example) _selects_ some people as its leaders, through its process of promotion from within and/or hiring from outside. For corporate CEOs, competition within the isolated market for CEOs also plays this role of selection.[*] Second, there is a process of teaching and conditioning those in the hierarchy (and the external market) to internalize values and goals consistent with the corporation's expansionist aims. David finds that it is > Interesting that you criticize capitalist societies for encouraging sociopaths to rise to the top of capitalist institutions. That, of course, in the view of Locke and others, is a primary benefit of commercial society -- it channels dangerous human energy into a relatively benign arena, as opposed to war, religious conflict, etc.. As the history of socialist countries demonstrates, sociopaths thrive and rise to the top in all environments.< As far as I know, it may be true that sociopaths thrive and rise to the top in all institutional environments that have existed so far (including so-called "socialist" ones).[**] But I disagree with Locke and similar thinkers that "commercial society ... channels dangerous human energy into a relatively benign arena." The problem is that "commercial society" _does not exist_ in the real world; instead, it refers to one small aspect of capitalism (i.e., buying and selling on product markets). The idea of commercial society -- the view that society is nothing but a big swap meet -- leaves out such things as the aggressive accumulation of capital, the exploitation of labor, and the despoiling of nature, which are just as much aspects of actually-existing capitalism as is buying and selling. The fact that some capitalist organizations form political alliances to promote war (e.g., Halliburton) also goes against this Lockean conception. Note that in a real-world capitalist society, it is quite possible to be a non-psychopathic individual while being involved in an institutional process that has psychopathic effects. Suppose that I (a certifiably non-psychopathic individual) own some stock in Halliburton (e.g.) I don't know what the company does exactly, so I can avoid any responsibility for its psychopathic actions; all I care about is its profits. The stock market rewards the company not for its morality but for its profitability. If the company can set up corrupt government contracts because of its relationships with Washington insiders, that promotes its profits, which (all else constant) raise its ability to pay dividends and/or result in capital gains. This is what the stock market rewards. Suppose that there's fear that the company will be caught and punished for its malfeasance. Then the market allows and encourages people to sell their stock _before_ the punishment happens. Since the actual probability, timing, and nature of the punishment are uncertain, the threat of punishment will not be totally reflected in current stock prices. (Of course, Halliburton insiders can benefit the most from this, since they can sell before there is _any_ dip in stock prices, while lobbying to prevent any punishment from ever happening.) Finally, since it is a limited-liability corporation that means that its stockholders cannot suffer from any punishment except for those due to stock-prices falling to zero. Rational stockholders hold diversified portfolios, so that they can benefit royally while worrying little. Suppose that I decide that I don't like owning stock in such a corrupt company. Not being a psychopath (by assumption), I sell my stock. This means that someone who doesn't care about such niceties can snap it up and profit from the company's future misdeeds. My responsibility is over, but the corrupt process continues. Suppose that I join others to sell our stock to protest the company's psychopathology. That depresses the share price, so the amoral ones can really make a "killing" (as it were) by buying low now and selling high later on. -- Jim Devine / "In an ugly and unhappy world the richest man can purchase nothing but ugliness and unhappiness." -- George Bernard Shaw [*] One of the problems we have these days in the not-for-profit sector is that the market for our leaders is not totally isolated from the one for corporate CEOs, so that our leaders want to be remunerated in a way similar to the corporate ones. There's an argument for keeping Jesuits in charge! [**] Among the bureaucratic-socialist states, Cuba may be an exception here. But it has other problems. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
