Business Baiting - 1972 Style; M. S. Rukeyser

Theorists and their youthful ad herents repudiate concepts of de velopment and plump for a zero growth in population and material well-being. They stigmatize the use Mr. Rukeyser is well known as a business con sultant, lecturer, and columnist. of electricity in labor-aiding tools of production as antisocial pollu tion, and blithely advocate the replacement of mechanically driv en equipment with the primitive "sweat and groan" of human mus cle power. Such academic naivete brings to mind a conversation years ago with an economic minister in In dia. As we discussed the low level of living in that sub-continent, I asked what steps native leaders were taking to supplement the efforts of the human muscle with advanced machinery. In a patron izing manner, he called my atten tion to India's surplus of workers, as though it were self-evident that India, in the circumstances, had no use for "labor saving" capital goods. But what the Minister did not seem to grasp was the fact 367 368 THE FREEMAN June that continuance of crude tech niques for using men as dray horses necessarily condemned In dian workers to low, productivity and a meager living.

Conditions Change Critics of business fall into the booby trap of assuming that ev erything is static. More than four decades ago, oil authorities were forecasting that in eight years the supply would run out. They proved to be astigmatic, perceiv ing only the then known reserves. They overlooked the fact that, with incentives, wildcatters would ferret out new sources of supply. And when, if, and as we consume all the known supplies of fossil fuel, the creative side of man will find substitutes in such newer technologies as atomic and solar energy. And in the process, they doubtless will achieve a measure of pollution control. The new enthusiasts in ecology carry a good cause to unreason able excesses. They ascribe utter irresponsibility to businessmen. They assume that corporate exec utives are solely concerned with "the bottom line" on the profit and-loss statement, and the devil take the hindmost. They lack the imagination to sense the oppor tunities for improvement within the system. Earlier in the cen tury, there was in some aspects of farming, for instance, and in the indiscriminate cutting down of trees in the forests, a seeming lack of concern for the future.

But protests were heard; there has been measurable progress in the development of scientific agri clJlture in place of the primitive "n1ining of the soil." And in Ore gon and elsewhere pioneer efforts were undertaken to avoid the de~ nuding of forests with the new concept of tree farms with new plantings to replace cuttings. In the American system, the guiding motto should be the line from the poet Louis Untermeyer, who wrote: "From sleek content ment, keep me free." Progress is never enough, and the operating principle of topflight business 'management is: "Let's seek to do better tomorrow what we appear to be doing well today." The con- ' tinuingvigor of the American competitive system depends on the knowledge and courage of the elite who understand its functioning and have the means of communi cating the benefits to others. Fear of Technology What we see today is a recur rence of the simplistic revolt in the nineteenth century of men like Samuel Butler, who decried the Industrial Revolution. In his ErehuJon in 1872, Butler appeared as the enemy of the machine.

1972 BUSINESS BAITING - 1972 STYLE 369 In this new era ecologists are decrying technology as a polluter, ignoring the capability of technol olgy to develop methods to mini n1ize pollution. The alarm ringers assume that they alone want a world of pure air and pure water. They jump to the conclusion that the profit motive is the enemy of Nature. Perceptible gains will come when there is mature recog nition that technology is a human tool and can be devoted to man's ends. If, by way of illustration, existing methods of burning coal or using gasoline in automobile engines pollute, then it makes sense to accelerate research and development to find ways of achieving the benefits while con trolling the adverse. effects. In stead of viewing the problem in the naive spirit of setting the good guys against the bad guys, it is time to recognize that leaving the environment in the form that men find it is consistent with good business. If consumers desire less pollution, they will need to under stand that devices to avoid pollu tion are a cost of producing goods and services.

Thomas Robert Malthus, the economist, warned in 1798 of on coming unavoidable poverty and distress on grounds that popula tion increases by geometric ratio and the means of subsistence only by arithmetical ratio. However, his prophecy has been unfulfilled. Methods of cultivating land have not remained static. Creative minds in science, invention and engineering have developed new and better means of production, and in advanced economies a spec tacularly smaller ratio of the total population than in earlier times is producing vastly more abundant quantities of food and fibers. In light of the contemporary or ganized efforts to put a ceiling on economic progress, it doesn't make sense for investors, financiers and managing directors of great com panies to ignore the impact of the new-style business baiting. Per haps I can do no better than to repeat here what I said in 1938 in my pamphlet "Sell the Business as Well as the Product": 1mproving the climate of popular opinion would help to remove the bar riers to a free circulation of goods and services from makers to users.

... Misstatements and misconcep tions about business have been so widely propagated that dissemina tion of the truth by business would be .enormously helpful. Business would not have to gild the lily, for truth is much more favorable than current rumor. The country needs to escape from the tyranny of obscure, weasel words and from doctrinaire ideology. Sim ple arithmetic, in double-entry form, as understandable as the family bud get, can be used to photograph for 370 THE FREEMAN June the lay mind the essential processes of business. Such new style "candid camera" shots which give glimpses behind the scenes in the business world will help to promote friendly cooperation among government, busi ness and labor. It can make crystal clear that the unwarranted sniping at business is directed at the vital in terests of millions of life insurance policy holders, owners of savings ac counts, ... and of tens of millions of individual owners of shares of Amer ican corporations.

These comments made thirty four years ago are a reminder that business baiting is not a new phenomenon in 1972. Only the rhet oric has changed. In the intervening years, great strides have been made in human izing corporate reports, and today some alert companies, such as Standard Oil (N.J.), U.S. Steel and others, have used TV commer cials creatively to depict the social usefulness of their enterprises. James M. Roche, who recently re tired as chief executive of Gen eral Motors, has in recent months taken leadership in urging greater attention to the attacks on the premises on which free enterprise rests. The Brave New World Basic in this approach is ob jective understanding of the sig nificance - of the revolt of some articulate young people. Since they will in due course inherit the earth, their views, including their misconceptions, should not be ig nored. Noone questions the right to dissent, but it is important also to develop a sense of responsibil ity in discussing matters relating to the well-being of the people.

Certainly, the "brave new world" won't be ushered in by escapists. Youths who indiscriminately re ject the mature as hypocrites have little insight into the history of man. In downgrading their par ents as insincere because their conduct doesn't always square with their professed code of ethics, the young tend to overlook that through the ages man has been caught in the conflict between his animal instincts and his stand ards of civilized procedure. It would, of course, be millenary if everyone invariably lived up to his code; but the remedy for human frailty certainly is not the rej ec tion of standards. Much of the venom against the Establishment springs from an emotional distaste for the compet itive system, which calls upon in dividuals to stand up and be mea Slued. Much loose talk glorifying the "underprivileged" and the "disadvantaged" is really quarrel ing with the Lord for creating man with an infinite variety of differences in aptitude, skill, moti1972 BUSINESS BAITING - 197.2 STYLE 371 vation, and LQ. The demagogic struggle to level down is an effort to replace divine patterns with man-made molds making all per sons identical.

Much of the business baiting results from an emotional bias against competition. It takes char acter to be willing to be measured, and to face the grim fact that not all of us are topnotchers in every skill. And it would be a dull world indeed if we were all cast in pre cisely the same mold. Instead of letting destructive emotions be come dominant, there should be not only a renaissance of respect for the work ethic, but also new approval for self-supporting in dividuals who achieve up to their own optimum in all categories of talent. The diligent hewers of wood and drawers of water de serve respect, which should not be reserved exclusively for glamorous creative artists, publicists, profes sional men, and chairmen of cor porate boards. The threat to economic and other achievement does not come primarily from overseas compet itors, but from ill-conceived, mis guided theories developed at home.

No investments in growth are at tractive if the "wave of the fu ture" is for home-grown com munes in place of competitive effort. Prosperity will rest on a slender reed indeed if those who vote and ratify public policy don't understand the factors that make for better living. Slogans against the Establish ment should be examined minutely to determine whether they hide rejection of self-discipline, thrift and industry. In a free society, no one is forced to work for a higher standard of living than he desires, but none who undermines the sys tem by circulating misconceptions should go unanswered. Just as a freeman is entitled to express his views, his neighbor should have the freedom to audit and appraise the other fellow's opin ions. Then the validity of concepts can be tested in the unrestrained Inarket place for ideas. , IDEAS ON LIBERTY A Precarious Life ANY COMMUNITY which depends for its economic growth up,on the whims of succeeding Congresses is in economic jeopardy. Some day, the taxpayers might say "no," and then where is the life of that region which has become wholly dependent upon federal help?

From an address in 1955 by CLARENCE A. DAVIS Under Secretary of the Interior BLOODfrom TURNIPS ~ Notes toward an ltnderst~nding of John Law's TERRILL 1. ELNIFF economlC errors WHEN JOHN LAW arrived in France in 1716, he found France on the edge of bankruptcy. The government debt amounfed to 2.4 billion livres plus another 590 mil lion livres worth of billets d'etat outstanding royal promissory notes which were worth about one third of their face value. The deficit in the government accounts for 1715 was 78 million livres - a deficit of nine million livres more than the total revenues for that year. 3 The people were overtaxed and starv ing, and commerce was at a stand still. 4 Law received a charter for his Banque Generale in 1716. It was a private operation, handling all the normal functions of a bank. It was also authorized to issue bank notes called "bank crowns," which were to be redeemable "in money of the weight and denomination of the day of issue."5 This was sound banking policy, even though Law's Mr. Elniff teaches American history at the Ben Lippen School, a Christian preparatory school in Asheville, North Carolina.