The CEO Serves: Moral Purpose and Business Leadership Mark Fiorenzo

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Fall 2007 | Volume 17 | Number 4 Religion Inside this issue de Souza The Bottom Billion • Nothstine Good Capitalism, Bad Capitalism • Carey In Defense of Intellectual Property • Miller Liberty Praying and Paying • In the Liberal Tradi- tion Tommaso de Cajetan • Sirico Mandated & Giving Doesn’t Come from the Heart

An interview with Edward M. Kopko, Photo : of Butler International Inc.

A Journal of Religion, Economics, and Culture Editor’s Note

erty is not the same thing as capitalism, ment about CEOs, it would be worth and there are variants of capitalism that clarifying what image of the CEO is threaten liberty. After all, a moral look under consideration. Is it the rapacious, at the economy does not defend capital likely corrupt figure we see so often in as a good in itself, but rather human television dramas? Or is it the customer- freedom as the desired goal. serving problem-solver who sees to it that the firm is motivated by the proper Welcome, Ray, to the Acton Institute, values? Kopko argues for the latter, based and to R&L! on his own experience, as well as his Acton’s Michael Miller revisits the his- editorship of a business magazine specifi- Sometimes before you get to the main torical debate about FDR in reviewing cally devoted to management issues. Amity Shlaes’s The Forgotten Man. Five argument, you have to argue about Finally, I contribute a review of what years ago, Conrad Black published a what you are arguing about. Perhaps promises to be an important book in magisterial FDR biography subtitled that seems tedious, but if you bear with the economic field closest to my heart: “champion of freedom,” arguing that me, you might be convinced that it is development. Who should be our con- FDR saved both democracy and the free important. This issue of Religion & Lib- cern in the developing world? Is it the economy from the twin threats of war erty features several pieces that try to five billion who do not live in the and depression. Shlaes, with Miller’s clarify what we are arguing about. world's rich countries? Is it the middle agreement, takes a decidedly less favour- four billion who live in countries that Our new managing editor, Ray Noths- able view on the economic liberty front. are, by historical standards, rapidly tine, reviews Good Capitalism, Bad Capi- So before that next argument about FDR, growing? Or should it be the “bottom talism, and praises the authors for sort- it would be better to clear up which FDR billion” who are diverging from global ing out the many phenomena that are you propose to argue about—the cham- growth and actually falling backward described as capitalism. Oligarchic capi- pion of freedom, or the emerging statist. talism is not the same as entrepreneur- in absolute terms? Paul Collier’s book ial capitalism, and defenders of eco- Similar issues are highlighted by our lead may well change the way we think nomic liberty should not burden them- interview with Edward M. Kopko of But- about development, and change what selves with defending the former. Lib- ler International. Before that next argu- we are arguing about.

Editorial Board Contents

Publisher: Rev. Robert A. Sirico The CEO Serves: Moral Purpose and Business Leadership: Edward M. Kopko ...... 3 Executive Editor: John Couretas The Bottom Billion: Father Raymond J. de Souza ...... 4 Editor: Rev. Raymond J. de Souza Good Capitalism, Bad Capitalism: Ray Nothstine ...... 6 Managing Editor: Ray Nothstine Acton FAQ ...... 7 Graphics Editor: Peter Ho In Defense of Intellectual Property: David H. Carey ..... 8 The Acton Institute for the Study of Religion and Liberty promotes a free so- Double-Edged Sword ...... 9 ciety characterized by individual liberty and sustained by religious principles. Michael Miller ...... Letters and requests should be directed to: Religion & Liberty; Acton Institute; Praying and Paying: 10 161 Ottawa Ave., NW, Suite 301; Grand Rapids, MI 49503. For archived is- (Middle) Management as a Calling: John Lunn, Robin sues or to subscribe, please visit www.acton.org/publicat/randl. Klay, Vicki TenHaken ...... 13 The views of the authors expressed in Religion & Liberty are not necessarily In the Liberal Tradition: Tommaso de Cajetan ...... 14 those of the Acton Institute. Column: Rev. Robert A. Sirico ...... 15 © 2008 Acton Institute for the Study of Religion and Liberty.

2 Religion& Liberty The CEO Serves: Moral Purpose and Business Leadership An Interview with Edward M. Kopko

Edward M. Kopko

Edward M. Kopko has been the president, like Enron and Arthur Andersen—only to line such wonderful progress for the world. chief executive officer and chairman of the their own pockets at the expense of sharehold- board of Ft. Lauderdale, Florida-based But- ers, employees, and the public, or so the story You have said that the majority of chief execu- ler International, Inc., since January 1987. seems to go. Do CEOs feel as though they’re tive officers run their businesses in an ethical Butler International, with 3,800 employees, under siege? way. How do business leaders begin to commu- is a worldwide provider of technical and nicate that and change the public’s perception of technology services, helping clients such as Chief executives generally believe that what they do? Boeing, Caterpillar, Citigroup, Los Alamos they are not well understood and have been made almost into cartoon characters I believe that most companies have com- National Laboratories, Merrill Lynch, Veri- municated their policies and approaches zon, and many others. by some in the media. When Mr. Kopko is chairman and chief executive of- was the last time ficer of CE Group and Chief Executive you saw a movie Magazine, where he is publisher. Chief Ex- where the CEO of ecutive Magazine is a leading publication a company was that has been devoted to publishing articles on depicted as a good strategy and issues for chief executives for more guy? They may than twenty seven years. Mr. Kopko holds a not be under siege B.A. degree in economics from the University of as they were back Connecticut, an M.A. in economics from Co- a few years ago lumbia University. He spoke recently with during the Enron R&L executive editor John Couretas. period, but business leaders still —————————————————— have very low Edward Kopko (far center) conducts one of his usual business meetings A lot of critics are taking potshots at CEOs these ratings from the for many years. And most companies are days. They make too much money, they have general population. managed according to these stated princi- too much power, and they run companies— Yet you say that the CEO is “perplexed” about ples. But most people are not looking at how to respond to these attacks. Why? these policies and approaches because they do not make news. Honesty is not “ ...most people are not Most CEOs I have talked with do not be- sensational, unfortunately. Companies lieve they should defend themselves and looking at these poli- have long had stakeholder-based policies their work. To their way of thinking, ac- cies and approaches that have holistic views of their roles to tions speak louder than words. They have provide good services, quality employ- a point, of course, but we all should be because they do not ment and have positive community in- doing a better job of explaining why busi- make news. Honesty volvement. Unfortunately, a few well- ness contributes to the general well being publicized stories of some rogue compa- of society. I believe that much work needs is not sensational, nies overshadow the years of great work of to be done in educating our country on unfortunately.“ many. Those are the names that too many economics and the important and noble people remember. roles that business leaders have in creating continued on pg 12

Summer Fall 2007 2005 | Volume | Volume 17 15| Number | Number 4 1 3 The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It

Reviewed by Father Raymond J. de Souza

Development remains the most pressing economics and director of the Centre for human question in economics. As inter- the Study of African Economies at Ox- “ The bottom billion is esting as stock market models might be ford University. A former director of de- or monetary policy in managing the velopment research at the World Bank, not exclusively Afri- business cycle, the most fundamental he is a specialist in the economic plight can, but most Africans question in economics is that of growth. of Africa. Hence his recent book, The Bot- belong to it, along with What leads to economic growth? And tom Billion, focuses mainly, but not ex- how can those who are poorest realize clusively, on Africa. ’places such as Haiti, the benefits of growth? Collier begins by making distinctions in Bolivia, the Central Every few years a book comes along that the developing world. Of the world’s Asian countries, Laos, makes a significant contribution to our roughly six billion people, one billion thinking about those most important live in the rich countries. Four billion, Cambodia, Yemen, questions. One thinks of the work a few including those in China and India, live Burma, and North years ago of Hernando de Soto in The in countries that are developing, indeed Korea.’” Mystery of Capital, which proposed think- quite rapidly. That leaves the “bottom ing about the slum-dwellers of Latin billion”—the poorest who live in coun- Much development literature looks at America as potential entrepreneurs, if tries that are not developing at all, and the developing four billion or includes only they could access the small capital are actually falling behind what can the bottom billion along with countries locked away in their slum dwellings. properly be called the “developing that are doing much better. Collier notes A similarly important contribution has world.” The bottom billion is not exclu- that the World Bank has large offices in been made by Paul Collier, professor of sively African, but most Africans belong every major middle-income country (the to it, along with middle four billion) but not a single per- “places such as son resident in the Central African Re- Haiti, Bolivia, the public. Collier’s book corrects that over- Central Asian sight, and it is critical, for the happy countries, Laos, truth is that the majority of the world’s Cambodia, population is developing, and well on its Yemen, Burma, way to becoming no longer poor. That is and North good news not heard often enough. Korea.” Collier includes fifty “The middle four billion have experi- eight countries enced rapid and accelerating growth in in his bottom bil- per capita income,” Collier writes. Dur- lion, and they are ing the 1970s, such growth was 2.5 all small nations percent per year, in the 1980s and 1990s with very low in- it was 4 percent, and in this decade thus far, 4.5 percent. “These growth rates © Jon Ng. Image from sxu.hu comes.

4 Religion& Liberty Why the Poorest Countries Are Failing and What Can Be Done About It may not sound sensational, but they are such trouble? Consider that in the whole without precedent in history. … Even developing world excluding Africa, Col- where people are still poor, these societ- lier reports that only 1 percent lives in “ The societies of the bot- ies can be suffused with hope; time is on countries that are both land-locked and their side.” resource-scarce. In Africa, fully 30 per- tom billion can only be In contrast, the bottom billion experi- cent live in such countries—countries rescued from within. In enced negligible growth, and then abso- that, absent colonial map-drawing, have every society of the bot- lute decline. By 2000 they were poorer no economic reason to exist. than they were in 1970—societies suf- Collier is at his best when looking at how tom billion there are fused with despair and diverging dra- natural resources (oil, minerals) can en- people working for matically from a world in which every- courage conflict, exacerbate bad gover- change, but usually they one else is rich or getting richer. Why? nance, and enervate nascent manufac- are defeated by the pow- Collier explains by way of sketching four turing if those windfall revenues come traps into which the bottom billion have too early to countries dealing with the erful internal forces fallen: armed conflict, distortions due to other poverty traps. stacked against them.” natural resource riches, being landlocked Collier writes in plain English and has a with bad neighbors, and bad governance biting sense of humor, but often it is a in a small country. He marshals an im- case of laughing because the only alter- included in the network of entrepre- pressive array of data, ingeniously re- native would be to weep. It is a bleak neurship and exchange. searched and interpreted, to show how picture for the bottom billion, especially “Let me be clear: we cannot rescue the bottom billion are in situations in when Collier argues that they may have them,” Collier writes. “The societies of which development is very unlikely. missed the boat on the opportunities the bottom billion can only be rescued from globalization. So abundant are the Civil war, for example, eats up resourc- from within. In every society of the bot- supplies of cheap labor in Asia that there es and hampers economic growth. But tom billion there are people working for is no prospect of low-wage manufactur- in a low income country without eco- change, but usually they are defeated by ing jobs heading to the bottom billion nomic growth, the likelihood of civil the powerful internal forces stacked anytime soon. war is greater—in the absence of hope against them. We should be helping the for a better economic day, seizing the What then is to be done? Collier does heroes. So far, our efforts have been pal- spoils of the state is comparatively more not blanch from bold solutions. Most try: through inertia, ignorance, and in- attractive. It is not poverty that pro- small country armed conflicts and coups competence, we have stood by and duces conflict, Collier argues, but the can be stopped relatively cheaply by watched them lose.” absence of prospects of growth. The intervention from abroad, which he ad- Identifying losers is not a happy task. killer effect is that once armed conflict vocates, insisting that the lesson from But offering creative ways to understand takes root, it can become a trap out of Iraq cannot be “never intervene.” Rich the losses with a view to correcting them which it is difficult to escape, for civil country governments could at least stop is a signal service. The Bottom Billion does war diminishes growth. facilitating bad governance by refusing just that for those who need it most. Another factor Collier identifies is being to accept the ill-gotten gains of corrupt Father Raymond J. de Souza, editor of Reli- landlocked with scarce resources. Coun- regimes in their banks. Greater trans- gion & Liberty, studied economics at Queen’s tries with scarce natural resources, un- parency in natural resource payments University in Kingston, Ontario, and the able to live off the land, need to live off might correct some of the abuses that University of Cambridge before his theological their labor—manufacturing. But getting skyrocketing oil prices are permitting. studies for the priesthood. manufactures to market in a small, land- On trade, the goal is to use favorable locked country is difficult, especially if trade policies to “prime the pump” for you have bad neighbors. Why is Africa in bottom billion exports—they need to be

Fall 2007 | Volume 17 | Number 4 5 Good Capitalism Bad Capi- talism, and the economics of growth and prosperity

Reviewed by Ray Nothstine

The authors of Good Capitalism, Bad and the Middle East, is to be avoided best system because it promotes new Capitalism explain why capitalism is not because it’s designed to promote the breakthroughs in technology and in- a monolithic construct. Before the end interests of the ruling few. State guided novation. The United States is by far of the Cold War there was a perception capitalism tends to be consistently be- the greatest example of entrepreneur- that capitalist economies were generally ial capitalism. “Without the entrepre- the same, due to the stark contrasts be- “ Entrepreneurial capi- neur, [scientific] knowledge might tween Western economies and Soviet- possibly have lain dormant in the style command economies. Authors talism is by far the memory of one or two persons . . . William J. Baumol, Robert E. Litan, and best system because it younger firms produce substantially Carl J. Schramm draw out distinctions more innovations per employee than between different forms of capitalism promotes new break- larger more established firms,” the au- and which models best promote growth throughs in technolo- thors say. and productivity. The four main types gy and innovation.” This form of capitalism combines the they identify are oligarchic capitalism, entrepreneurial spirit within an econo- state guided capitalism, big firm capital- my that also hosts large, established ism, and entrepreneurial capitalism. hind the demands of market forces, as corporations. In essence, it’s a combi- While all of these systems respect prop- government makes many mistakes in nation of the entrepreneurial spirit erty rights to one degree or another, the trying to manage an economy. Big firm with big firm capitalism. In fact, cor- authors argue that there are significant capitalism can at times be reluctant to porations are needed in order to refine differences among these types and how change and can lag in innovation. Big and mass produce the innovations into efficiently each promotes economic firm capitalism typifies much of the affordable and useful products for the growth and expansion. super corporations of continental Eu- consumer. rope and Japan. Oligarchic capitalism, which is preva- More than half of the jobs in the United lent in much of Latin America, Africa, Entrepreneurial capitalism is by far the States are created by firms that are less

Good Capitalism Bad Capitalism: And the economics of growth and prosperity

Authors: William J. Baumol, Robert E. Litan, and Carl J. Schramm Publisher: Yale University Press (2007) 336 pp., Hardcover $18.00, ISBN: 978-0300109-41-2

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6 Religion& Liberty than five years old. In addition, the au- Acton FAQ thors propose some policies that will en- hance the formation of a successful entrepreneurial economy. First, in an en- What Exactly is a Think Tank? trepreneurial economy, it must be relatively easy to form a business without expensive start up costs related to bu- A think tank doesn’t just catalogue ideas, but participates in and promotes the reaucratic red tape. Incentives for growth free exchange of ideas. While we seek to address a host of problems and pro- are also seen as critical, as well as a com- pose solutions from a foundational stand point, our freedom and independence mitment to free trade, and property and at the Acton Institute is a valuable asset. Some critics of think tanks simply as- contract rights. Also, governments “must sume they are only extensions of controlling interests or have little impact on discourage activity that aims to divide up the public debate. the economic pie” rather than to increase the size of the pie. Ideas often have the power to transform the thinking of those at the grassroots level of policy and thus equally influence those in the circles of power. Margaret “The lesson we draw from this history is Thatcher’s privatization reforms in the United Kingdom were significantly guided that without entrepreneurs, and without by the Institute of Economic Affairs. In addition, this institution played a substan- the right incentives for them to devote tial role in other reforms in the U.K. as well. themselves enthusiastically and tirelessly to commercial use of their innovations, This is of course one example of many where think tanks play a vital role in for- economic progress cannot be counted on mulating and shaping ideas. Christopher Demuth, president of the American and indeed is unlikely to occur,” the au- Enterprise Institute, wrote an article in the Wall Street Journal titled "Think Tank thors tell us. Confidential" and in it he said, “Think tanks serve as storehouses of ideas, pa- Good Capitalism, Bad Capitalism reinforces tiently developed and nurtured, waiting for the crisis when practical men are something many of us may already desperately seeking a new approach, or for the inspired leader who sees the pos- know—the United States has been an sibility of action before the crisis.” economic force unlike any nation in the With first class documentaries, commentaries, educational conferences, and pub- history of the world. But there is no im- mutable law that says it will always be so. lications, the Acton Institute is influencing the debate, unlike at any other time in Entitlement programs and a tax system in our past, not just here in the United States but internationally as well. Our schol- dire need of reform pose a threat to our ars and staff are also first class. We will always be committed to defending the long term prosperity and an ability to message of faith, liberty, and economic freedom. It’s an essential message that stay competitive. Ultimately, a strong resonates with freedom loving people who are also committed to a serious and commitment to financial incentives that transforming relationship with God. allow entrepreneurial endeavors to suc- ceed and flourish will go a long way in sustaining the United States as the economic powerhouse of the highest order.

“ Good Capitalism Bad Capitalism reinforces something many of us may already know— the United States has been an economic force unlike any na- Kris Alan Mauren Executive Director tion in the history of the world.”

Fall 2007 | Volume 17 | Number 4 7 In Defense of Intellectual Property

by David H. Carey

This article is excerpted from the new Acton computer software just as we all may which all people could possess and use Institute monograph, The Social Mortgage share the ideas in this paper. Each copy is concurrently? The burden of justification is of Intellectual Property. as good as the original. Your having a very much on those who would restrict the copy in no way diminishes my use of, or maximal use of intellectual objects.” One reason why intellectual property in access to, my copy. In contrast, a tangible some new technologies may appear to be To this objection we reply: Income from item of property can be in only one place unlike other forms of property lies in its selling one’s product is a form of use; so it at a time and may well be diminished by indefinite replicability—multiplication is not the case that sharing intellectual multiple uses. This contrast between tan- without diminution. property is loss-free to the sharer. While gible and intellectual property has led sharing intellectual objects may not in- You and I, and indefinitely many others, some to think that intangible items can- volve loss of possession or loss of personal each may have access to some item of not or ought not to be restricted as tan- use, the loss of income incident to such gible items are. If you take my pen, I sharing is a true and significant loss and cannot use it, but if you take my idea, I not to be dismissed. “ While sharing intellectu- suffer no analogous loss. Thus, it might al objects may not in- seem that new technological develop- Second, Hettinger spells out the puzzle involved in determining what value ought volve loss of possession ments that result in perfect replicability (such as computer software or genetic to be ascribed to one’s labor. For instance, or loss of personal use, coding) may render traditional notions market value does not solve the puzzle for the loss of income inci- and norms of property obsolete. two reasons: Market value is “a socially created phenomenon,” and not in any di- One philosopher who has raised this, along dent to such sharing is a rect sense the product of one’s own labor. with several other objections to intellectual Market value results from many factors true and significant loss property, is Edwin Hettinger. He asks, and not just “the latest contributor,” so “Why should one person have the exclu- and not to be dismissed.” that it would seem unfair to reward only sive right to possess and use something this latest contributor with the value of a

The Social Mortgage of Intellectual Property

Author: David H. Carey Publisher: Acton Institute (2007) 69 pp., Softcover $6.00, ISBN: 978-880595-27-3

Avaliable at acton.org/bookshoppe

8 Religion& Liberty product, but then how would such value be divvied up? “To what extent individual Double-Edged Sword: laborers should be allowed to receive the market value of their products is a ques- The Power of the Word tion of social policy,” Hetinger argues, “it is not solved by simply insisting on a moral right to the fruits of one’s labor.” Our response is that, in principle, at least, Luke 17:12–19 all predecessor contributors to a product could get their due in a free market (if we understand their due to be determined by As he was going into a village, ten men who had leprosy met him. They stood at a the free transactions of willing sellers and distance and called out in a loud voice, “Jesus, Master, have pity on us!” When he saw buyers, the essence of a free market). them, he said, “Go, show yourselves to the priests.” And as they went, they were A closely related attempt to justify intel- cleansed. One of them, when he saw he was healed, came back, praising God in a loud lectual property is the argument from des- voice. He threw himself at Jesus' feet and thanked him—and he was a Samaritan. ert. The basic idea here is that one deserves Jesus asked, “Were not all ten cleansed? Where are the other nine? Was no one found to be rewarded for worthwhile labor. To this Hettinger objects that property rights to return and give praise to God except this foreigner?” Then he said to him, “Rise and to the results of one’s labor are not neces- go; your faith has made you well.” sarily the form that such reward should take. Here, he adduces Lawrence Becker’s counterexample: Parents do not deserve The compassion of Christ is endless. In this passage we hear about Christ and property rights to their children. Even if it his healing of ten men who were afflicted with leprosy. It is important to could be established, moreover, that property rights should be proportional to the note the ten who are healed are outside the town and grouped together. It value of one’s labor, this would not justify would not be uncommon for those afflicted with leprosy to congregate to- patents, copyrights, or trade secrecy, in gether because they were branded unclean and outcasts by the religious au- that none of these forms of intellectual thorities of the day. The law requires them to remain outside the town. property guarantees a reward neither more Because they are marginalized by others, they have to depend on pity and nor less than one deserves. charity from passers-by who offered them some form of compassion to meet We grant that intellectual property rights their physical needs. do not guarantee a just reward. We know of no automatic device that would pro- Luke tells us all ten were healed on their way to see the priests who had the vide such a guarantee. Nor are such rights authority to declare these men clean. How often are we afraid to seek and “necessarily the form that such reward should take.” Rather, their justification, in approach God because of our own unclean hearts and sinful ways? The ten our legal system, at least, rests chiefly on with leprosy were in such a dire situation, quite possibly they felt little long- the social bargain by which such rights term hope for their lives. Miraculously, they were healed on their way to see are offered in return for the ultimate en- the priest. Only one returned to give thanks to the author of his healing, and richment of the public domain. Accord- he was a Samaritan. ingly, these rights are social constructions rather than natural endowments. To Thankfulness to God is an essential characteristic of Christianity. Further- admit this, however, is not to impugn more, the Samaritan who returned to give thanks to Jesus was given an extra their justice any more than the merely blessing. Christ said, “Your faith has made you well.” It is faith and the pow- conventional status of traffic laws im- pugns the justice of traffic fines. erful grace of God that makes one whole and saved. The Apostle Paul himself says in his second letter to the Corinthians, “Thanks be to God for his inde- David H. Carey is professor of philosophy at Whitman College in Walla Walla, Washington. scribable gift.” The book may be purchased online through the Acton Book Shop.

Fall 2007 | Volume 17 | Number 4 9 Praying and Paying: Amity Shlaes’ The Forgotten Man

Reviewed by Michael Miller

In my high school U.S. history class, I Shlaes’s new history of the Great De- use by William Sumner. Almost pro- often argued with my teacher about the pression. Three quarters of a century phetically, Sumner wrote in 1883 that legacy of Franklin Delano Roosevelt. My out, Shlaes takes a dispassionate look at whenever one group tries to alleviate youthful contention was that FDR had the history of the depression with a the suffering of another group and expanded the scope of government be- focus on economics. She argues that comes up with a plan to do so there is yond the intent of the founders and while Roosevelt may have done some always a third, forgotten group that harmed the economy. My teacher took good, many of his policies had grievous bears the burden—it is not the poor nor the conventional view of Roosevelt as a consequences and that his experiments the rich nor the intellectuals but it is hero who got us out of the Great Depres- with the economy did untold harm to usually the one in the middle. He works, sion. But I wouldn’t budge. the many he tried to help. The Forgotten he votes, he generally prays—but he I had been shaped by my parents, espe- Man shows the dangers of economic cially my mother—a staunch opponent planning, and echoes Friedrich Hayek’s “ When government of Roosevelt since the time she was a critique that, despite even the best inten- teenager. We sometimes forget the pas- tions, planning an economy can never usurps the role of indi- sion that Roosevelt enkindled both pro work because there is just not enough viduals and families, it information to make all the right deci- sions. The New Deal was a classic ex- harms more than the “ The New Deal was a ample of the remedy being worse than economy, it weakens classic example of the the disease. the fabric of society Shlaes unravels the myth of Roosevelts remedy being worse heroic New Deal as the cure of the Great and reduces human than the disease.” Depression, and shows how Roosevelts freedom.” attempts to have the government plan its way out of the depression only deep- and con. During the depression, my ened and lengthened it. FDR—and Her- always pays. mother would argue vigorously with her bert Hoover before him—tried to stop Shlaes develops the many characters father, a Hartford fireman and commit- the depression through a myriad of gov- central to the time, from Coolidge, ted Democrat, that Roosevelt’s New Deal ernment programs and interventions; Hoover, and Mellon, to FDR and his was exacerbating the depression and and both failed because they did not un- brain trust of intellectuals whose untir- placing America on a path toward stat- derstand and could not predict the ef- ing work and penchant for novelty led to ism. Her father said that she would grow fects of their policies. one experiment after another. It was a up and know better. “I did,” she told me, The title of the book, The Forgotten Man, time where excitement was high every- “and I was right.” is not what one first expects. Imbedded where about the possibilities of planning My mother is older now but only slightly in it is the tension between Roosevelt’s and large scale projects—from the Hoover less passionate, and was happy when I use of the term to mean the poor and Dam to the five-year plans of Stalin to showed her The Forgotten Man, Amity downtrodden as contrasted with its first the corporatism of Mussolini. One of the most illuminating quotes in the book

10 Religion& Liberty Praying and Paying: Amity Shlaes’s The Forgotten Man comes from Rex Tugwell, a Columbia it can provide for today. eliminate the vagaries of the market, but economist and one of FDR’s main advi- As we come full swing into the election instead of creating an atmosphere where sors. Tugwell and several others made a cycle of 2008, Shlaes’s book gives a people, knowing they are safe, can be trip to the Soviet Union several years warning against the dangers of the pop- free to live out their dreams, we see before he was convinced that govern- ulist rhetoric coming from both Demo- countries where people are afraid to ment should take an active role in man- crats and Republicans. In times of eco- start businesses, afraid to get married, aging the economy. He was suspicious of nomic uncertainty the promises of popu- and afraid to have children—all of these entrepreneurs as obstacles to prosperity lism and the government coming to the are connected to the fear of taking risk and the volatility of the market. Tugwell rescue can be attractive. But despite the and a lack of hope. When the state also witnessed his father’s business fail- rhetoric, populism always fails wherever takes over what individual families ure during the depression and that only it is tried because no matter how good should do, it undermines their integrity solidified his enthusiasm for big plans the intentions, government bureaucrats and infantilizes them. and distrust of the “forgotten man.” “We can’t plan an economy and can never are no longer afraid of bigness” he wrote, create the prosperity like the entrepre-

1,000 unemployed men marching from the Esplanade to the Treasury Buildings in Perth Families were affected as hope faded

“Unrestricted individual competition is neurs that Tugwell mistrusted. Amity Shlaes’s The Forgotten Man is a the death, not the life of trade.” When government usurps the role of good reminder of the reality behind the Shlaes’s history is engaging and bal- individuals and families it harms more rhetoric of big government schemes. anced. It does not demonize either than the economy, it weakens the fabric Let’s work to make sure that the one Roosevelt or Hoover, but does show the of society and reduces human freedom. who “works, votes, and generally prays” folly of economic planning and the real- Planners don’t like freedom because of doesn’t again end up being the one ity of unintended consequences. It also the uncertainty and the risk of failure. It who pays. reveals the naiveté of the intellectual is true that freedom does entail risk. But Michael Miller is the director of programs at classes of the time, those who were so if you try to eliminate the risk you end the Acton Institute. enamored by both the Soviets and Mus- up suffocating the human spirit. If we solinis corporatism and the idea of big- look at Europe today we see huge social ness. It is an important book not only welfare programs that were supposed to for its historical value but for the lesson

Fall 2007 | Volume 17 | Number 4 11 Kopko interview continued from page 3

Is there a successful strategy or tool for separat- how successful companies operate. We port the community in some additional ing a large company from other public corpora- also have tried to clarify for the CEOs and philanthropic or charitable way, that tions whose reputations have been maligned our many readers that most businesses should not be viewed as the basis for their because of serious scandal? In other words, how have an inherently positive nature to moral purpose. Charity and philanthropy can business leaders disassociate themselves them. They solve problems. Everything are things we all should be doing, of from leaders with serious integrity issues? from food distribution, healthcare, hous- course. But a well run successful business ing, finance, It’s very simple. As a business leader, you and education point to the record of your company. You are more readi- do not condone unethical practices. ly available to How important is the chief executive in motivat- serve us and at ing and instilling a sense of morality and ethics prices that are in business organizations? the best that technology You lead by example. It starts at the top today has to and is part of the culture of the company. offer. But, as A good example is product development, we know, most which is something that is at the core of CEOs and com- your operations. In today’s highly companies do not petitive business environment, it is very do a very good difficult to “cheat” your customer with an job in commu- inferior product. Some companies might nicating this. get away with it for awhile, but that is not Research show that Wal-Mart, for exam- a strategy for long-term growth. If you ple, has saved poor people more money cheat, you just don’t last in business. Of through lower prices than any govern- “Organizational values course, these fundamental principles ment program. Yet Wal-Mart is vilified at are often translated apply to relationships with your employ- times. Chief Executive Magazine reports on ees and business partners and in fact ev- the good and the bad of CEOs and their into personal conduct, erything else you do. companies and on balance we see our for better or worse.“ Aren’t we really talking about character? Can a work helping to improve the state of the CEO—for better or worse—change his or her business community. has a high moral purpose by definition. stripes simply by pledging allegiance to a corpo- Many business leaders view charitable works rate ethics policy? and community relations projects as the main Some CEOs have come under attack from Chris- It is about character and it is about institu- way to show an organization’s high moral pur- tian groups for supporting social causes that tional character. Organizational values are pose? Is that sufficient? they view as immoral. How do CEOs navigate these controversial issues? often translated into personal conduct, for The higher moral purpose of a business better or worse. As I mentioned, most organization and the people who make it Most CEOs do not like being front and companies have strong ethics on how they go is to first serve the community of users center on social issues. And that is un- treat customers and employees. CEOs of their products and services. To provide derstandable. Business is about serving know that it is the promise of good service a needed service, at a lower cost, with customers and employees from very dif- and fair treatment that is the bedrock of better technology, is my definition of a ferent walks of life. CEOs generally pre- their existence. It’s not a mystery. moral purpose. Think of health care and fer their businesses to reflect an inclusive How do you see your work at Chief Executive how the life expectancy of many millions model so they avoid taking stands on Magazine shaping and contributing to the of people has been dramatically extended many of these issues. in recent times. So you see, we are by standards of morals and ethics with business You serve as CEO for Butler International. leaders? definition better off when we exchange our services and trade with each other. What are the most important things you do as I see the work of Chief Executive Magazine Too many companies and CEOs feel apol- the company’s leader? contributing significantly to the way CEOs ogetic for running a successful, profitable My role is to help drive the values and improve in their roles as leaders. We do company. This is hard to understand. vision for the business. As we said, it this in many way—from peer-to-peer CEOs should see their success as an asset starts at the top. sharing of best practices to reporting on to the community. If they choose to sup-

12 Religion& Liberty Fall 2007 | Volume 17 | Number 4 13 In the Liberal Tradition

Tommaso de Cajetan [1469-1534]

Since, then, it is clear from experience that very many cities would be church’s ban on usury raised questions concerning wheth- in need of many necessities if there were no merchants, and these er the practice of bankers buying bills of exchange at merchants could not conveniently practice their business without prices determined by the foreign exchange rates was per- money changing, it is necessary and honorable for money changing missible or whether it involved a covert form of usury. to exist in cities not so much as pure money changing, but, as is obvi- Cajetan insisted that such exchanges did not involve ous from our statements, as serving the economy and politics. usury because they were advances of money to be repaid Described as small of stature and giant in intellect, Cardi- nal Tommaso de Cajetan, O.P., was praised by Pope Clem- ent VII as the “lamp of the Church.” Cajetan is perhaps “ As a Thomist, Cajetan understood most famous for being the legate sent by Pope Leo X to the value of logic and philosophy. Germany to try and persuade Martin Luther to back down This, however, did not prevent this from his confrontation with the Roman Church. Less well great Christian theologian from known are Cajetan’s important contributions to economic seeking the views and insights of thought, described by the economic historian Raymond business practitioners.“ de Roover as helping “to lift the barriers that still opposed the march of capitalism.”

Born in Gaeta, Italy, into a noble family, Cajetan entered in a geographically different place and in a different the Dominican Order at an early age. Studying in Naples, money-currency, even though there was a time differ- Bologna, and Padua, he was quickly recognized by his su- ence involved. Cajetan’s view was to become the church’s periors and peers as possessing an unusually powerful official position, and opened the door to the full develop- mind. Amidst a plethora of writings, he managed to pen ment of money-markets and wider understanding that, three short treatises on economic matters, his most impor- in the conditions of a market, money was not sterile, but tant being on exchange dealings. The significance of this rather a commodity, which could be traded like other lies in the commodities. fact that ex- When discussing his ventures into economic subjects, Ca- change deal- jetan makes a point of mentioning on several occasions ings were that he consulted merchants and bankers about the nature central to of their work. As a Thomist, Cajetan understood the value the practice of logic and philosophy. This, however, did not prevent of what we this great Christian theologian from seeking the views and would today insights of business practitioners. call money Martin Luther (center left) and Tommaso de Cajetan (right) markets. The

14 Religion& Liberty Rev. Robert A. Sirico

Tommaso de Cajetan [1469-1534] Mandated Giving Doesn’t Come from the Heart It seems that some Biblical fallacies private sector, which is the engine of wealth creation. If we never go away, especially as re- can imagine a world in which there is no private sector at gards redistribution and the poor. all, we can know with certainty that it would be a world of Hardly a day passes when I don't bare subsistence at best: universal impoverishment. hear some version of the following: Wealthy societies today can afford to create large welfare The Gospels speak clearly on the states while avoiding that fate. But let us never forget the issue of the poor. They must be cared for. Special obligation funds that make it possible do not appear as if by magic. falls to the rich who have the resources to care for them. They are taken from others without their active consent This country has programs in place that are designed to do except in the most abstract sense that people might vote just that. Therefore, Christians have an obligation to po- for them. litically support these programs. I cannot see how this method of redistributing wealth has The problem here is the slick move from personal ethics to anything to do with the Gospel. Jesus never called on pub- public policy. What is required of us as individuals may or lic authority to enact welfare programs. He never demand- may not translate into a civic policy priority. In the case of ed that his followers form a political movement to tax and the welfare state, it is possible to argue that it does great spend. Nor did he say that the property of the rich must always be forcibly expropriated. He called for a change in “ The more people hear that the welfare the human heart, not a change in legislation. There is a state discharges their moral mandate to massive difference. give, the more these programs crowd gen- There are other grave dangers in confusing the welfare uine charity.” state with personal charitable obligation. The more people hear that the welfare state discharges their moral mandate to give, the more these programs crowd genuine charity. "I good (though I would dispute that). Whether it does or gave at the office," becomes the attitude. This is essentially does not, however, a government program effects nothing what was behind the comment by Ebenezer Scrooge in A toward fulfilling the Gospel requirement that we give of Christmas Carol when he dismissed his need to be charita- our own time and income toward assisting the poor. ble. "Are there no poorhouses?"

The reason has to do with matters of the human heart. If There are further problems. The programs are not effective we are required to do anything by law, and thereby forced over the long term. They generate dependency and bu- by public authority to undertake some action, we comply reaucracy. They create upside-down incentives. But leav- because we must. That we go along with the demand is no ing all that aside, the core message here is that, from a great credit to our sense of humanitarianism or charity. moral point of view, they do not fulfill the criterion that The impulse here is essentially one of fear: we know that the Gospels specify for generosity, which must come from if we fail to give, we will find ourselves on the wrong side within and cannot be imposed from the top down. of the state. Rev. Robert A. Sirico is president of the Acton Institute for the Remember that the government has no money, no re- Study of Religion and Liberty in Grand Rapids, Michigan. sources, of its own. Everything it has it must take from the

Fall 2007 | Volume 17 | Number 4 15 For sale on DVD in March!