"Courage," or Why Profits Really Do Matter More Than Anything

Rarely, if ever, do I link to The Wall Street Journal, on the premise that the overwhelming majority of you have already seen it, so why point to what's been in front of your face?  But rules are made to be broken, so this morning I give you two WSJ links.

They have in common that they undergird the raison d'etre of this blog:  To increase the revenues and profits of law firms.   (Had you missed that?—sorry, sometimes it helps to state the obvious).  More importantly, this is a "have no fear" post:   Damn the Politically Correct Police, and stake your claim to superior financial results, unconflicted by duelling considerations (within, of course, the limits of law, ethics, and simple humanity).

The first WSJ link is to Alan Murray's brisk and refreshing reminder about what's wrong with corporations garbing themselves in the robes of "social responsibility:"

"What harm is there in companies taking more responsibility for social and environmental problems? Plenty, if you adhere to the theories of Adam Smith..."

Still have a soft spot in your heart (or head?) for global corporations voluntarily going "beyond compliance"—taking steps viewed in the wisdom of NGO's as beneficial to society albeit not required by law or regulations? Then I invite you to look at the 20th-Century's track record of creating wealth and alleviating poverty: Was it the indubitably well-intentioned socialist or heavy-handed paternalist "capitalist" countries that raised their citizens highest, or was it the more rough and tumble American model? And if that seems old news, look at what China has accomplished in the short years of the 21st-Century, by betraying communist principles (economically, if not yet politically), as opposed to, say, the previous 50 years being more or less true to communist principles.

But relatively unfettered capitalism can be hard, can it not, particularly on those at the bottom of the ladder?  Hasn't the MSM lately been full of articles undermining the American Dream's notion of upward mobility based on drive and determination?  It's hard for the least fortunate to get a leg up!  Well, as they say, it depends on what the meaning of "hard" is.   

Alan Reynolds succinctly points out the statistical and methodological flaws in the latest anti-Dream studies: "It helps to focus on a few reasons why some people earn more than others -- they work harder, and have more experience and/or more schooling."

• households in which two people work earn five times as much as households in which no one works
• households in which one person works full-time earn more than twice as much as those in which someone works part-time
• college graduates earn three times as much as high school dropouts
• experienced people (45-54) earn more than twice as much as those starting out (under 24)
• there are two workers per household in the top fifth of the income distribution, less than one worker in the bottom fifth

Still protesting?  Aren't the rich getting richer, etc.?  Yes, they are, and the shocking fact is:

"Since the Census Bureau overhauled the way it counts income in 1993-94 (making the figures incomparable with prior years), the share of income earned by the top fifth rose to 49.8% in 2000-03 from 49% in 1993-94."

Back to Adam Smith.  The title of his most famous book reads in full:  "An Inquiry Into the Nature and Causes of The Wealth of Nations."  In other words, he was concerned with the creation of wealth, and was at least in most of his published writings an agnostic as to how it was spent.  (Only after his death was it learned he had, in fact, donated a large proportion of his income to charitable causes.) The first order of business must always be to generate wealth; the distribution of it comes later.

It is only fitting to conclude with an excerpt from Smith himself (Wealth of Nations, Modern Library edition [1994], Book I, Chapter 1, pp. 12-13), which resounds with truth and, to our 21st-Century ears, that damnable political incorrectness.  But ask yourself this:  Is it preferable to grant people the power and liberty to seek self-enrichment, or to presume one knows their best interests and can provide it for them?:

"It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a  well-governed society, that universal opulence which extends itself to the lowest ranks of the people. [...]

"Compared, indeed, with the more extravagant luxury of the great, [a day labourer's] accommodation must no doubt appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of a European prince does not always so much exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many a [tribal] king, the absolute master of the lives and liberties of ten thousand naked savages."