Posts Tagged profit

Celebrating the Artificial: General Motors and the Skeletons of American Industry

GM is Alive, Government Motors, bailout, subsidy, taxpayerThe Treasury Department is reportedly feeling pressure from General Motors to “sell the government’s entire stake in the auto maker,” a move that, at the moment, would result in an estimated $15 billion loss for U.S. taxpayers. But such are the realities of dysfunctional private-public-private back-rubbery:

GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as “Government Motors.” Executives have said the U.S.’s shadow is a drag on its reputation and hurts the company’s ability to recruit talent because of pay restrictions.

Last week, I explored these tensions over at Values & Capitalism, critiquing the government’s malinvestment in GM as well as the Democratic National Convention’s overt attempt to romanticize such failures:

“GM is alive, and Osama bin Laden is dead,” said President Obama in his recent speech at the DNC. The crowd responded with resounding cheers, energetically waving signs bearing the same slogan. Now, just a week later, bumper stickers are already primed for your Prius.

The problem is: Osama bin Laden is actually dead, and GM has resurrected into a zombie of sorts, fumbling and stumbling about under the control of autocrats—licking its lips for another round of taxpayer flesh.

Yet of all of the tall tales of glorious GM resurrection, the Obama’s administration’s underlying attitudes about human potential are made most clear by none other than Vice President Joe Biden, whose DNC speech rails against the “Bain way” (i.e. the profitable way), arguing that “the Bain way may bring your firm the highest profits, but it is not the way to lead our country from the highest office.”

And there she blows:

Profitability, we are told, should no longer be a priority of the American people. Further, we are told, it shouldn’t be a priority of the United States government. And this is what garners cheers from the ruling party of our nation.

We now live in a country where government-appointed know-it-alls waste tens of billions of taxpayer dollars on failing companies, only to then be hailed as “defenders of industry.” We now live in an era in which viewing government in terms of “balance sheets and write offs” is demonized; in which waste and inefficiency are downplayed; and in which those who pursue economic growth in a traditional sense are viewed as obstacles to human flourishing.

The truth, of course, is that “the Bain way” secures higher profits by discouraging wasteful behavior and drawing on everything that’s good in humanity. It is this—value creation and the reward of earned success—that makes the market much more than a market, empowering us to attain the American Dream.

The market can only be a source for good if it remains a free market: an arena where contributions come before rewards, not after. And the moment Americans forget this—the moment we join this overt celebration of government-subsidized failure—is the moment we start down the road that invariably makes America like every other entitled, vacuous Western democracy, rather than the exceptional nation we’ve always been.

If this is the contrast the Democratic party wishes to draw—a battle between Artificializer Obama vs. Realistic Romney—so be it. Americans will know what they’re buying, and if the pollsters’ current predictions hold true, we’ll get all the skeletons of “industry” and “economic progress” that we ask for.

To read the full post, click here.

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Chosen Instruments: Obedience and Socio-Economic Decision Making

Ananias restoring the sight of Saint Paul, Pietro De Cortana, 1631I have received a bit of criticism for my constant claim that obedience is the defining factor of the Christian life (e.g.), with most of critiques rooted in the belief that we are to instead focus on “sacrifice” or “love” (as if obedience to God would not involve either).

My questions are most simply: (1) love according to whom and (2) sacrifice for what?

I recently wrote about this very thing, emphasizing the need to follow the Holy Spirit in all that we do (hint: that’s why he’s here).

To further solidify this point, I wanted to take a moment to look at the Apostle Paul — a man who understood that “following the way of love” was interconnected with “eagerly desiring the gifts of the Spirit” (i.e. learning to hear his voice, discern it, and do what it says). As I have also previously noted, such an approach is extremely difficult because there is no hard-and-fast, legalistic solution. The Christian life is not a one-stop, altar-call sort of thing.

Paul had a good grasp of this, and made clear in his letter to the Philippians. Following a summary of his personal trials, Paul provides encouragement to the believers by honing in on the value that obedience will yield while also reminding them of the tensions it implies for their work here on this earth:

Yes, and I will rejoice, for I know that through your prayers and the help of the Spirit of Jesus Christ this will turn out for my deliverance, as it is my eager expectation and hope that I will not be at all ashamed, but that with full courage now as always Christ will be honored in my body, whether by life or by death. For to me to live is Christ, and to die is gain. If I am to live in the flesh, that means fruitful labor for me. Yet which I shall choose I cannot tell. I am hard pressed between the two. My desire is to depart and be with Christ, for that is far better. But to remain in the flesh is more necessary on your account. Convinced of this, I know that I will remain and continue with you all, for your progress and joy in the faith, so that in me you may have ample cause to glory in Christ Jesus, because of my coming to you again.

We all know what this means for our post-earth destination (or, I hope we do), but what does this mean for our own personal callings and struggles today? What does this mean for our socio-economic engagement with others?

First, it is clear that Paul has a purpose and that purpose is not his own. He did not endure imprisonments and beatings for nothing, yet he also did not endure them for personal glory or some lofty martyrdom status. Paul was not standing in the streets and blocking traffic for the mere purpose of being hauled away and lauded in the annals of do-gooder history. Paul was not offering himself as a firstborn calf on some altar of cultural symbolism or earthly greatness.

Paul was arrested for speaking the truth and doing what God told him to do. He was not seeking suffering as an ideal for himself (or anyone else). He was seeking the Glory of God to the point of suffering.

Likewise, Paul’s impetus did not come from some fleeting passion for “social justice.” Paul did not discover his life’s purpose from reading Barbara Ehrenreich in undergraduate school and getting worked up about class divisions and money-grubbing sinners. His purpose came from Read the rest of this entry »

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The Morality of Profit: (Mis)defining Generosity in a Win-Lose World

"Give me all your money...or else!"

This week at Common Sense Concept, I discuss Tom Palmer’s new video on the “morality of profit” as a follow-up to my post on whether capitalism is compatible with Christian values.

Palmer uses the charity efforts of Bill and Melinda Gates as a launching pad for discussion, focusing on their professed desire to “give back” to society. The problem with such language, Palmer notes, is that “you can’t give back what you didn’t take.”

The Gateses did not, of course, take anything, as true free exchange would not permit it:

We are not forced to fill company coffers against our will. We are not doomed to buy oranges or apples if the price isn’t right. Instead, we are free to collaborate of our own free will and by our own consent. In such a world, profit is merely a symbol of community value. If we reject profits as immoral, we should be prepared to reject the community that empowers it. The tricky part, as I’ve mentioned before, is that this is most often ourselves. This is what the “morality of profit” all boils down to: whether mutual exchange is indeed mutual.

This tells us something about the morality of profit, but Palmer’s discussion also teaches us something about the nature of generosity — namely, that when we misunderstand the way wealth is created, we also misunderstand the ways in which (or through which) our generosity should be and can be channeled and expressed.

Indeed, understanding this process is crucial for understanding how God calls us to use our wealth:

By diluting our charity to some redistributionist obligation, we dilute the very potential of our charity, both for ourselves and our communities. How are we to maximize our generosity and distribute compassion effectively if we harbor faulty, guilt-ridden sentiments about Read the rest of this entry »

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Transformation Pays: The Spiritual Benefits of Self-Sacrifice

The Crucifixion with the Virgin and Saint John

Today at Common Sense Concept I add a bit more clarity to my previous post on Ayn Rand. This time, I focus more closely on the spiritual payoffs to self-sacrifice.

Here’s an excerpt from the post:

In this post, I hope to offer a bit more illumination as to how we as Christians are to process such a “payoff” in our own lives. But take note: I am not advocating a give-and-take mindset by which we throw our lives at the altar while begging for goodies from heaven. For any of these “payoffs” to occur, our heart motive must be properly aligned to what Jesus calls us to. That’s the tricky part. For us to be able to enjoy the blessed life, our sacrifice has to be genuine and steadfast. Our motives have to be pure and properly aligned to a desire to perform God’s will. Without such an alignment, our sacrifice is in vain.

To launch my argument, I use John Piper’s famous book, Desiring God: Meditations of a Christian Hedonist:

Piper discusses the many ways in which God desires for us to be joyful, arguing that “the chief end of man is to glorify God by enjoying Him forever.” This is the key: In order to “profit,” as Rand would say, we must not only learn to enjoy God, but we must begin to recognize how he is constantly changing us and transforming us through our selfless attempts to change the world for his glory.

The question?

What do we risk if we reject Christ’s call to selfless self-interestedness? If we dismiss his instructions as silly contradictions (as Rand does) or exalt them as glorious masochism (as many Christians do), will we be able to fulfill God’s calling for us? Will we be able to enjoy God if we fail to glorify him through our obedience?

To read the full post, click here.

In my next post, I will focus on Read the rest of this entry »

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Dear Ayn Rand: God Is Not a Communist Dictator

Ayn RandIn my recent post at Common Sense Concept, I tackle some issues surrounding that most beloved of libertarian icons, Ayn Rand. More specifically, I focus my critique on her views about Jesus and his teachings.

Many people have criticized Christians for admiring Rand’s political views, primarily because Rand was an atheist who abhorred Jesus’ teachings on self-sacrifice (Rand prefers the term altruism). Christians should certainly be wary of the anti-Christian elements within Rand’s thinking, but I think examining her errors will help us better understand the implications of Rand’s philosophy, as well as those of Christianity properly understood.

I think Rand’s fundamental error is that she doesn’t think any personal good or personal profit can come from self-sacrifice, whether in the spiritual realm or in the natural. Jesus taught, on the other hand, that properly executed self-sacrifice yields gains in both.

Here’s an excerpt from my post:

The message of Christ is both self-sacrificial and self-interested all in one. The Beatitudes don’t read “cursed are the poor,” yet they also don’t read “blessed are the rich.” Likewise, Jesus constantly qualifies his demands for sacrifice with promises of reward, whether in this life or the next. For anyone who reads the Gospels in full, Jesus is consistent and intentional in the way he elevates the ideal of self-sacrifice alongside the ideal of rational self-interest.

In a sense, I am sympathetic to Rand. After all, her views about the Christian God have been reinforced by the church itself. As I have discussed recently (here and here), the church consistently paints a picture of a God that elevates the role of oppression alongside salvation:

Whether or not we want to admit it, the historical church has been complicit in painting God as Rand does — as some lofty and detached communist dictator who delights in limiting our ambitions and seizing his fair share. Like Rand, many Christians opt for a one-sided Jesus who delights in our suffering and whose heavenly Father sees oppression as a prerequisite for salvation.

To read the full post, click here.

Read the rest of this entry »

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Charity as Investment: Bill Gates and the Malaria Vaccine

A couple months ago I wrote a post about the recent pledge by Bill Gates and Warren Buffett to give away at least half of their riches to charity. In my post, I noted the potential of such charity while emphasizing that giving away your money is not necessarily as transformative as investing it for profit.

However, if one does decide to divert their resources to charity, the main focus of the discussion becomes centered on whether those resources are being allocated efficiently and effectively. 60 Minutes recently interviewed Bill and Melinda Gates about the targets of their charity, and their responses indicate that their efforts are not lacking in the realm of care and consideration.

You can watch the video here (HT David Henderson):





As the report indicates, the Bill and Melinda Gates Foundation has 850 employees, all of whom are hired to determine “which science or development projects are worthy.” This reminds me of the daunting task undertaken by John D. Rockefeller.

As I’ve already mentioned, we are bound to disagree on where and how we think certain resources should be allocated because we all see value differently. For example, as a Christian, I am particularly concerned with the limits of Read the rest of this entry »

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The Ultimate Exchange Rate: Real Value in a Material World

The Parable of the TalentsIt’s easy for us economist types to get caught up in earthly measurements of value — partly because it’s fun, but mostly because it’s important.

Even more important, however, is the pursuit of real value in heavenly terms. When it comes to this, we all struggle with getting the earthly “exchange rate” down, and as long as sin is around, we always will.

But Jesus gives us a pretty clear image of what it might ultimately look like in these back-to-back examples.

The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys that field.

Again, the kingdom of heaven is like a merchant in search of fine pearls, who, on finding one pearl of great value, went and sold all that he had and bought it.

In other words, no matter how much we have accumulated in our own lives, whether it’s wealth, skills, prestige, or status, none of it matches up to the value of a life transformed and saved through Christ.

But how do we purchase such a life? How do we make this ultimate trade-in?

The first and most important answer is that we can’t — Jesus already paid the ultimate price through his blood, which pays for our entrance into the “kingdom of [God’s] beloved Son.” It is only through this propitiation that we can be saved.

But there is still this central notion throughout the Gospel of obedience, which Jesus often illuminates by talking about trade. The question rises: If the ultimate price is already paid, what is left to trade in? What are we Read the rest of this entry »

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Milton Friedman on Greed: Where In the World Do You Find These Angels?

This classic Milton Friedman interview has now been seen by many on the Web, but since it deals with topics commonly discussed on this blog I thought I’d post it for your weekend enjoyment.

Watch the video here:




Donahue’s first question is this:

Did you ever have a moment of doubt about capitalism, and whether greed is a good idea to run on?

Friedman responds with this:

Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? …The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus.

Friedman goes on to point out a few of these achievements (e.g. Einstein’s theory of relativity, Henry Ford’s automobile), and emphasizes that Read the rest of this entry »

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Pay What You Wish: The Origins of Consumeristic Charity

BreadI previously wrote a post discussing Panera Bread Co.’s new pay-what-you-wish business model and its macro implications.

Here’s a brief summary of how the new store works (from USA Today):

While the store does have cashiers, they don’t collect money. They simply hand each customer a receipt that says what their food would cost at a conventional Panera. The receipt directs customers with cash to donation boxes (there are five in the store). Cashiers do accept credit cards.

Last week, the Freakonomics blog posted a new study on pay-what-you-wish pricing, which suggests that the best way to maximize profits in such models is to “combine pay-what-you-wish pricing with an appeal to charity” (quoted from Freakonomics).

Marketing professor Ayelet Gneezy reached this conclusion by presenting 113,000+ theme park visitors with several pricing schemes for purchasing souvenir photos.

The four schemes, as summarized by Freakonomics, were as follows (and I quote):

  1. A flat fee of $12.95
  2. A flat fee of $12.95 with half going to charity
  3. Pay-what-you-wish
  4. Pay-what-you-wish with half going to charity

When it came to profitability, the “charity” factor provided a healthy boost in demand for photos sold under the pay-what-you-wish option.

As Gneezy explains in the abstract:

At a standard fixed price, the charitable component only slightly increased demand, as similar studies have also found. However, when participants could pay what they wanted, the same charitable component created a treatment that was substantially more profitable.

This would seem to bode well for the Panera model, even though Panera is far less explicit when it comes to the actual amount devoted to charity. Although “all profits” will go to charity, the consumer has no idea Read the rest of this entry »

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Deny Yourself: The Upside-Down Economics of Christianity

Christ in the Garden of Gethsemane by Sebastiano Conca (1746)

Many have dismissed Christianity by claiming it is based in an ideology of pure selflessness — one in which the truly devoted Christian is destined to a life of pain, poverty, and abandonment. Given how many actual Christians assume this perspective, such a view is understandable. But although the Bible promotes selflessness on many levels, the holistic truth about what God intends for us is a bit more nuanced.

The key to overcoming this confusion is a recognition of the difference between poorly aligned and properly aligned self-interest.

Jesus provides the clearest explanation of these matters in Matthew 16:24-28:

Then Jesus told his disciples, “If anyone would come after me, let him deny himself and take up his cross and follow me. For whoever would save his life will lose it, but whoever loses his life for my sake will find it.”

Jesus then illuminates the profit motive behind it all:

…”For what will it profit a man if he gains the whole world and forfeits his soul? Or what shall a man give in return for his soul? For the Son of Man is going to come with his angels in the glory of his Father, and then he will repay each person according to what he has done. Truly, I say to you, there are some standing here who will not taste death until they see the Son of Man coming in his kingdom.”

As counterintuitive as it may appear in natural terms, the choice to “lose your life” and follow Jesus provides the ultimate value. But although the new covenant is not a zero-sum game, we must remember to keep our intentions in selfless mode. That’s the tricky part. We must deny ourselves even while doing so will be in our best interest.

This is a challenge, because we are natural beings prone to natural inclinations. Even when we center our hearts and minds around the Word of God, we are constantly tempted to act according to Read the rest of this entry »

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