Thursday, March 12, 2009

Potpourri III

All sorts of interesting emails and recommendations apologies if I don't comment on all of them. Long week, and my brain is cabbage at the moment.

A New Era of Responsibility: Renewing America's Promise. As far as I can tell, this is a preview of the President's new budget. If you have money, or want to have money in the future, this document will be of particular interest to you. Mr. Obama wants to put a salary cap on the American dream. Don't know what that is yet, but I'm sure if I ever hit it, my taxes will soon reflect it. It's not about economic growth, it's about "fairness," as Obama and his team define it. In my book, fairness means everyone plays by the same rules. I'm guessing his definition doesn't match mine.


Book recommendation from reader Rolando: Wikinomics: How Mass Collaboration Changes Everything. It's on the reading list, anyway.

Other links from comparing the U.S. national debt to gross domestic product. However, I prefer more official statistics. Try this one from the Bureau of the Public Debt. Not great, but not nearly the "120%" the other site was claiming. And, when you get right down to it, still not good for the country.

And there's this one on "social business." Here's how Wikipedia puts it:

Social Businesses seek to profit from acts that generate social improvements and serve a broader human development purpose. A key attribute of social businesses is that an increase in revenue corresponds to an incremental social enhancement. The social mission will permeate the culture and structure of the organization and the dual bottom lines - social and economic will be in equal standing with the firm pursuing long term maximization of both.

Here's my problem with this scheme: businesses exist to make a profit. When they exist to do other things, they will eventually cease to make a profit because the "social improvements" will eat into everything. Am I saying these things shouldn't be tried? No, I'm just saying I believe them to be impractical because social goods are moving targets, never satisfied ("the poor will always be with you"), and success is often difficult or impossible to quantify. If you make your business about anything other than providing goods or services to make a profit, it will eventually cease to be a business. What you or your shareholders do with that profit is your business.

For instance, [Paul] Newman's Own has donated 100% of its profits to charitable organizations. That's great. Terrific, in fact. I admired Mr. Newman for putting his money where his mouth is. But he created a for-profit business, not a non-profit institution. He provides quality food & beverage and other products which the public wants and enjoys, and which pays the company's employees and expenses. The profit is at the end of the day, after the taxes are counted and the bills are paid.

Now you think I'm probably splitting hairs on this. What's the big deal? The big deal is that Newman's Own's business is making products and making a profit. Their direct business is not about making the world a better place or addressing "health, education, poverty, environment or climate urgency." They're running a business and then turning their money over to those activities. It really is a matter of mindset and incentives. I'd prefer to do good while doing well rather than just doing good (a guy's got to earn a living, after all). For example, Google and Virgin both have strong corporate initiatives surrounding philanthropy and humanitarian causes, but the funding sources for these initiatives are profits, which are made possible through powerful brands and high-quality products and services that people want.

From my reading chair, starting a business with the goal of "ending poverty" only works indirectly (e.g., by creating low-cost/high-quality goods or services or jobs that contribute to the betterment of individual lives--or by making profits that can be used toward charitable activities). Otherwise, you might as well start a non-profit organization. The goals of profit-making and directly improving the general or specific public welfare are nearly incompatible; there has to be something in it for the company, or there's no return on investment besides good feelings.

Hat tip to Joe for the links below. They will probably appeal more to Gen Y readers, as I started reading and arguing with the writer almost immediately. Her priorities are obviously very different from mine, but then most people's are, so I guess I shouldn't be terribly shocked.

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