Friday, August 31, 2012

People Over Profits?

After Mitt Romney’s speech tonight at the Republican National Convention, some of the commentators mentioned that a couple of people started protesting during the speech and were carrying signs that said “People Over Profits.” The question I ask is, “What people? Whose profits?” My guess is that the “people” they were talking about included themselves, and the “profits” they were talking about were those of others. But just what is the thinking behind such a statement?

Many years ago when I was in college, I had a professor who asked the class what the purpose of a business was. Answers such as, “make a product,” “create jobs,” and so on were called out. The professor finally stopped us and said we were all wrong. He then informed us that the purpose of a business was to make money. In other words, earn a profit.

Is this wrong? Is this immoral? Well, of course not. Who in his right mind would put either his own money or money he has borrowed at risk with no plan to make it all back plus more? He might as well just hang onto the money he has and play it safe. But the lure of making a profit so as to better one’s life and those of his family is difficult to resist. In the end, this is not putting profit over people. It’s a person placing such an importance on himself and his family (in other words, people), he is willing to take a risk.

If the business starts out very small, it may be run totally by the owner. If not, then people will have to be hired just to get the business started. In either case, if the business is successful, it is unlikely that it can expand without hiring more people. If it continues to be successful, it will be even more profitable. So, where does all this revenue go? Well, for sure it doesn’t all go into the pockets of the owner. He’s not going to be able to obtain raw materials, labor, utilities, and so on without paying for them. But for every purchase he makes and every person he hires, he is in essence helping to enhance the lives of other people.

Well, maybe the owner loves profit so much that he will only pay a pittance for supplies and labor. Well, not if his competitors have anything to say about it. If other businesses are willing to pay more for their supplies and labor, then the owner will soon find that he can no longer obtain goods and services or labor because they will all go to the higher paying competitors. In other words, it is difficult for a business owner to rip off other people as long as we live in a free competitive environment. However, it can happen in a society where the government so limits the choices of people they find themselves stuck in an unpleasant position with nowhere to turn.

So, the only thing I can conclude is that perhaps the phrase “People Over Profits” is referring to a business owner who, when times are bad and profits are down, is willing to lay off people to keep his profits up. But think about it. If you had money at risk and were working hard to make and keep a business successful, isn’t there some level of profit that you would deem a minimum? If a business owner can make more money working for someone else where he can work less hours and have no money at risk, he has a choice to make. Lower the cost of operating his business, which may entail laying some people off, or shut down the business altogether, thus laying off everyone. I sometimes get the impression that some people view businesses as having a magical well from which money can be drawn in times of crisis. Well, it just isn’t so. Running a business is tough. That’s why I decided earlier on that I just wanted to work for someone else so I could earn a steady income without having to invest any of my or others' money. I have never been much of a risk taker.

Speaking of working for a salary, what’s another word for salary? PROFIT. When I work for a business that I have not invested in personally, then all of the money I earn is profit. The business owner has to take all the money she takes in and then pay for such things as rent, utilities, raw materials, taxes, business licenses, advertising, shipping, and the salaries of individuals like me that are risk averse and work for others. After all those expenses, they hope to have enough left over for themselves to make all their efforts worthwhile. So, if a very important employee leaves a company to work for another one offering a higher salary, is he putting profits above people? It may seem that way to the company that he left. But not so for the company he moved to.

When someone complains about people putting profit over people, they are usually talking about others. I once heard of a person who complained about a guy who quickly went to a hurricane stricken area to sell water at a premium price since this was price gouging. Yet, just a few minutes later he was talking about possibly taking his chainsaw down to the stricken area to cut up residents' fallen trees because he was sure he could make a large amount of money doing so. Can you spell double standard? Personally, the thing I found irritating about people castigating the water selling man is that, had the man just stayed at home and never took any water to the devastated area, no one would have said a negative word about him. If you were in the aftermath of a severe storm and you could choose between having water quickly at a premium price or having to wait a few days for the charitable groups to get water to you, which would you choose? After all, you wouldn’t have to buy the water. You could just wait like you would have had the “price gouger” never showed up.

So, given the opportunity to increase one’s profits, whether through getting a higher paying job or creating and expanding a business, most people will do so unless there are some downsides that are too unpleasant. That’s our human nature. We want to take care of ourselves and our families and improve our lot in life when the opportunity arises. Each person has to decide for herself what she is willing to risk or give up in order to do this. No person or government needs to be making that decision for us.

Sunday, August 26, 2012

Thoughts About 2016

Last night I went to see the new movie by Dinesh D'Souza entitled 2016: Obama's America. The movie is based on two books D'Souza has written: Obama’s America: Unmaking the American Dream and The Roots of Obama’s Rage. In the movie, D'Souza attempts to explain why President Obama thinks and makes decisions the way he does. In other words, he tries to define the motivating force behind this world leader. D'Souza presents some very compelling evidence based on Obama's own words, as well as those of his relatives and friends, that the driving principle behind Obama's decisions is anticolonialism. Obama's father was born and raised in colonial Kenya and became a strong anticolonialist. Several of Obama's mentors were anticolonialists also. To better understand the anticolonialist mentality, one must understand what it is like to be a part of a colony.

Throughout history, mighty empires have arisen that felt it was their destiny to conquer other peoples and extract the resources of their land. Some of the better known ancient empires were the Assyrian, Babylonian, Medo-Persian, Greek, and Roman empires. In more recent times, the best known and most powerful empire of all time was the British Empire. It was once said that the sun never set on the British Empire because it reached around the world. Part of the makeup of this empire was other countries that had been conquered and made colonies. The British would set up some form of government in these colonies and then go about extracting resources to take back home. As you might expect, many of the indigenous people of these colonized nations were not happy with this arrangement. They wanted independence and self-autonomy. They wanted the resources of their land to be used to enrich their own people rather than the country of their overlords.

Kenya was a colony of the British Empire from about 1890 until 1963. So, President Obama's father, Barack Obama Sr, who was born in 1934, grew up in a colonized Kenya. Had I been in his shoes, I would most likely have been anticolonialist also. In fact, I am very much an anticolonialist now, even though I was fortunate enough to have been raised in an independent country. So, if President Obama and I both share an ideology of anticolonialism, why do I disagree with many of his decisions about the direction of our country? That has to do with what one believes should replace the oppression of colonialism once the oppressors leave and the autonomy of a nation is re-established.

Some anticolonialists viewed the people of the British Empire as being capitalists. So, it was natural for them, once they became independent, to want to move as far away from capitalism as possible. Typically, people who reject capitalism, embrace some form of socialism. This is what many Kenyans did. This seems to be the mentality of President Obama as well. But the problem is this: colonialism is anything but capitalism. Perhaps once the resources were extracted from the colonies and made into products, the Brits dealt with other nations on a capitalist basis. But the way they dealt with the colonies was not capitalist by any stretch of the imagination.

The online Merriam-Webster dictionary defined socialism as “A) a system of society or group living in which there is no private property” and “B) a system or condition of society in which the means of production are owned and controlled by the state.”

The definition of capitalism is “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”

So, based on these definitions, you can see that colonialism is more akin to socialism than capitalism in that you have a government expropriating the wealth of some people for the benefit of other people. Had the British dealt with Kenya in a capitalist manner, they would have come in and negotiated a contract whereby they paid an agreed upon price for the resources they wanted. That’s how free markets work. Yet, for the colonies that viewed their overlords as capitalists, socialism became the alternative of choice upon becoming independent. They basically jumped from the frying pan into the fire. As George Obama, President Obama's half-brother, said in the movie, Kenya would be better off today if the “whites” had stayed longer.

Fortunately, socialism is not the true alternative to colonialism; freedom and capitalism are. This is the path the forefathers of the United States of America took. Remember that the USA was originally colonies of Great Britain. The Revolutionary War was the result of an anticolonialist movement. Yet, upon gaining independence, the movement led to liberty and capitalism. This smart move led to the creation of what would become the most prosperous nation on the face of the Earth. All because this country embraced the idea that a man's labor was his own and thus the fruits of that labor were his own also. This produced a great incentive for individuals to work hard because they were working for themselves rather than others.

Yet, somehow President Obama has come down on the side of viewing capitalism as the system that oppressed nations and socialism being the cure. D'Souza believes it is due to the influence of his father, mentors, and friends. Perhaps. But whatever the reason, Obama is unfortunately wrong in his assessment. Freedom, liberty, and capitalism are the cure for colonialism. Socialism is but a form of internal colonialism in which government takes the wealth of people by force and passes it on to others, just as the Brits took the wealth of other nations for the benefit of themselves.

I believe our country needs Change and Hope just like President Obama does. However, Obama's cure for our ills is akin to a doctor attempting to cure cancer by injecting the patient with poison. It only makes things worse. What we need is a leader that has a real cure for our nation's problems. Perhaps it is Mitt Romney. Perhaps it is Gary Johnson. I have personally grown skeptical of most politicians. Yet, I do know one thing. I agree with President Obama when he says we shouldn’t return to the failed policies of the past. History shows clearly that liberty works far better than oppression. So, let’s go back to that.

Monday, August 20, 2012

What’s So Curious About Ayn Rand?

In the August 18, 2012, issue of the TimesDaily newspaper was a commentary by Cynthia Tucker entitled “Rand is curious choice for veneration.” In this article, Ms. Tucker wonders how Rep. Paul Ryan, VP nominee for the Republican Party, could be a fan of Ayn Rand. After all, Rand was an atheist and a big proponent of using reason rather than faith to obtain truth. Ryan is a Catholic. How do these two jive? Well, I believe it is just as Ryan claims: he rejects Rand’s atheism, but embraces her view of government.

I personally became a fan of Ayn Rand when I read her book The Voice of Reason back in the 1980’s. When I read this book I suddenly realized that Rand was saying the things I believed but had not been able to express verbally. It was an epiphany. I went on to read many more of Rand’s writings, including some of her novels. I eventually began calling myself an Objectivist, although I have backed off that to some degree. There are a number of aspects of Rand’s philosophy that I disagree with, such as her inexplicable belief that a woman should never serve as the President of the United States. But if you think about it, it is very rare that any two people have EXACTLY the same beliefs about EVERY single topic. Everyone has his own ISM running about in his own mind.

Rand predicted many years ago that if the country kept following the path of governmental altruism and cronyism, the country would eventually reach a crisis point. She even predicted that the people in power would not even realize that it was their policies that brought on the crisis. Well, that is exactly what has happened. Is it possible for an atheist to be a prophet? In this instance, apparently so. The USA has attempted to provide everyone with anything that they want and at the same time regulate until they strangulate. This is a recipe for fiscal disaster. Why wouldn’t Rep. Ryan be a fan of Ayn Rand’s ideas on these matters?

While I agree with Ms. Tucker that Ayn Rand was not a perfect person—who is?—she gets one thing wrong about her philosophy. It’s a point that many people get wrong. In her commentary she says, “What’s more, Rand was an atheist and libertine whose private life was testament to her fierce belief that individuals should be free to do whatever they please, no matter the consequences to others.” Uh, WRONG! Here is what Rand really believed about how individuals should live their lives.

Man—every man—is an end in himself, not a means to the ends of others; he must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself; he must work for his rational self-interest, with the achievement of his own happiness as the highest moral purpose of his life.”

The essence of this quote is that no person is another person’s slave. Don’t expect me to sacrifice for you, and I will not expect you to sacrifice for me. We will live our lives by voluntary exchange. So, was Rand opposed to charity? No, not when it came to individuals supporting causes they deemed worthy of support. What Rand did find anathema was the idea of governmental charity. Why? Because that requires our leaders to extract by force the wealth of some citizens to give to others. This can work both ways. It can be the forced extraction of money from the wealthy to give to the poor, which is called welfare. Or it can be the forced extraction of money from the poor to give to the rich, which is called corporate welfare. Rand believed both types of welfare to be immoral since it required the force of government, thus making some people the slaves of others. However, she would have no problem with an individual voluntarily turning his money over to another person or organization. As Thomas Sowell once said, “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else's money.”

So, it is true that Ayn Rand was a flawed human being. I do not believe that she even followed her own philosophy 100% of the time. Yet, her core beliefs remain sound. Everyone should be free to pursue his or her own interests and not be made a slave, even to a small degree, of others. Can anyone really argue against that?

Thursday, August 16, 2012

Earning Your Keep

Many years ago my immediate supervisor and I were under the charge of a manager that had some traits that could at times be extremely exasperating. Perhaps you have worked for a manager with similar traits.

I recall the time when I was assigned a project that required me to create an experimental design for a research project we were undertaking in a laboratory. If you are not familiar with experimental design, it is a way to design a set of experiments that will maximize the amount of information from your experiments using a minimum numbers of operating conditions. This particular project involved turning crystals into granules in a heated rotary drum. I had a college student assisting me in the lab. We knew that for the first day of operation we would be running at conditions that would most likely just result in hot crystals exiting the drum, but that is the nature of an experimental design. You must operate across a wide range of conditions.

We had been running our test just long enough to reach steady state when the manager came into the lab to check on our progress. He took one look at the equipment and the end product and said something like, “This isn’t working. You need to change your operating parameters.” He then proceeded to change the heat levels and turn valves. In short order we had mud coming out of the rotary drum. At this point the manager said, “I’ll leave the rest to you,” and left the lab. Needless to say, we shut down the experiment and began cleaning out the equipment. One day of operation had been lost.

A couple of years later I had a different immediate supervisor, but that same manager. I was tasked with creating a PERT chart, which is basically a flow chart, for a new project on which we would be working. In those days, PERT charts were created using Post-It notes on a large sheet of paper rather than on a computer. Well, after a couple of days of effort, I completed the PERT chart. My supervisor looked it over and liked it. He then showed it to our manager. Afterwards, my supervisor came to me and said the manager wanted to make a few changes. I asked what they were. After explaining the changes to me, I informed him that if we made those changes, the PERT chart would be incorrect. He did not care. He just wanted to please the manager. So, even though I didn’t like it, I made the changes. My supervisor then showed the manager the updated PERT chart. He once again came to me and said that the manager wanted to make even more changes. I again asked what they were. Upon explaining the changes, I informed my supervisor that if we made those changes, the PERT chart would be back to what it had been when I originally created it. He said we needed to make the change. While I agreed that the changes were needed to get the PERT chart back to its original correct state, I was so frustrated that I just told my supervisor that if he wanted it changed he needed to do it himself. I then left the room, and he made the changes.

I have told these stories many times over the years. I have often wondered what drives such a person to act so impulsively. I believe I now understand. The underlying motivation is one of wanting to “Earn Your Keep”. This manager was in a position of authority over other employees. If the employees were mostly doing things right, never needing correction, then the manager might wonder what his or her purpose is. So, not wanting to feel useless, they take action, even if the action is detrimental to the goals of the group.

Can you think of some other people that are like my manager? Of course you can. It’s our political leaders, especially those in Washington DC. In their case, they are in positions of power over the entire country. They feel like they have to Earn Their Keep. Whenever a problem arises in some part of the country, they just assume that the private sector is incapable of solving it. So, they go to work creating laws and regulations that are supposed to help us. Or protect us. Or make our lives better. However, all too often they leave us citizens with a muddy rotary drum that has to be cleaned out. Then they are aghast when we citizens complain and tell them that their “solutions” only made things worse.

Listen up Washington. Sometimes, probably even most of the time, the best thing you can do is get out of the way. We are not incompetent. We can solve problems without governmental intervention. You just go about handling those things the Constitution authorizes you to do, which is primarily providing us with protection from criminals and foreign threats and protecting our individual rights. We’ll take care of the rest.