Sunday, July 27, 2014

Businesses and charities

Stephen L. Carter has an opinion piece for Bloomberg (reprinted recently in the GR Press) in which he claims that people's problem with Hobby Lobby and other businesses that claim religious rights is that they make profits, and profits are evil. He is completely wrong about this.

Yes, businesses make profits and charities don't. Charities must follow the non-distribution rule, that their members (contributors) must not receive any surplus funds generated by the charities' activities. Those funds must be used for the charitable purposes for which the organization was established. But that doesn't mean that a business can't earn profits, or that profits are wrong.

There are other differences between the two kinds of corporations that are more important. Businesses make our economy run. They provide goods and services that people are willing and able to buy, and they expect to make a profit in the process. As key economic institutions, we need them to be open to all, serving people without regard to race, nationality, gender, religious belief, or any other irrelevant personal characteristics. The only way we can have an open, competitive economy with opportunity for all is if businesses are required to serve all equally in accordance with universal moral principles.

Indeed, this principle of the openness of business is not only part of American national ideology, but is a basic part of Calvinist Protestant social thought. John Calvin's argument that the Biblical prohibition of usury should not apply to New Testament Christians was based on the idea that since there was no longer an exclusive "chosen nation," Christians should treat all others according to universal moral principles, especially the Golden Rule.

The anger that Carter detects about profits in today's America may be due to a violation of others of Calvin's basic principles. He held that the benefits of specialization and exchange should be equally shared between buyer and seller, and that the public benefit should take precedence over private gain. The growth of profits as a share of national income at the expense of wages suggests that this balance in the distribution of the economy's benefits has been disrupted in our economy.

Charities are established to provide educational, cultural, scientific, artistic, and religious services that often are not profitable, but which serve the public good, and which as a society we wish to promote. Businesses will not do enough of these things, or will not do them at all, and government often does not have the creativity, diversity, and sensitivity to do them well. So we make it possible for groups of like-minded people to contribute before-tax money to enable these activities. By their nature they include some but not others. This is especially the case for religious organizations. People with no affinity to a charity's aims, purposes, or beliefs can not demand service from in the way that they can demand service from a business. Businesses are not giving anything away, but charities are.

The same is true for employment relationships. Sympathy for a charity's purposes and belief in its principles is essential for employees of the organization. Charities have a well-recognized legal right to place religious demands on their employees that are not permissible for businesses. They could hardly operate in any other way. But businesses are chartered to generate economic activity, and their criteria are restricted to who can do the job well. Hobby Lobby can not insist that its employees endorse its religious beliefs, unless it wants to become a charity, collect donations, and start giving away flower pots.


Susan Fitzwater said...

Is Carter really saying that profits are evil? He says that lots of folks seem to think that profits are evil, but it didn't seem to me that he agreed with them.

John Tiemstra said...

No, he didn't say that, and I didn't mean to suggest it. My apologies for not being clear. What I think he is wrong about is his assumption that the only important difference between businesses and charities is that businesses make profits and charities may not.