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Is Business a Calling?
Think Tank Transcripts:Michael Novak
ANNOUNCER: 'Think Tank' is made possible by Amgen, recipient ofthe Presidential National Medal of Technology. Amgen, helping cancerpatients through cellular and molecular biology, improving livestoday and bringing hope for tomorrow.
Additional funding is provided by the John M. Olin Foundation andthe Lynde and Harry Bradley Foundation.
MR. WATTENBERG: Hello, I'm Ben Wattenberg. Corporateresponsibility has become sizzling politics. Among the issues du jourare downsizing, moving jobs overseas and CEO compensation. Theseraise issues about the relationship between moral behavior andcommercial gain.
Michael Novak is the author of a new book, 'Business as a Calling:Work and the Examined Life.' It is a different take on an issue thattouches all of our lives. The question before this house: Is businessa calling? This week on 'Think Tank.'
Michael Novak has written or edited more than 25 books aboutphilosophy, religion and culture, including his seminal work, 'TheSpirit of Democratic Capitalism.' He has taught at many universities,including Stanford and Harvard, and in 1994, he was awarded theTempleton Prize for Progress in Religion and cited as the progenitorof a new discipline, the theology of economics. He is currently theGeorge Frederick Jewett chair at the American Enterprise Institute.
Michael Novak, welcome to 'Think Tank' today.
MR. NOVAK: Thanks a lot, Ben.
MR. WATTENBERG: What do you mean when you say business is amorally serious calling? We normally think of a calling as somethingfor a priest or perhaps a doctor, but not a businessman.
MR. NOVAK: Well, many businessmen discover, sometimes later,sometimes earlier, that they're really good at something, that thisis something they were made for. There are three or four signs of acalling. One is that it's what you want to do. There may be somethings you're good at you just don't want to do. The second is you'vegot the talent for it, you've got the knack for it.
The third is you really enjoy doing it, it invigorates you, itmakes you feel at the top of your form when you're doing it. And manypeople in business discover that's what they were made for. This iswhat they seem to do best, what their talent is for. If they'rebelievers, and most probably are, they believe this is what God madethem for, and they're glad they found it. By the way, a fourth signof a calling is it's often hard to find. You don't find it rightaway. You do some trial and error, feeling your way toward it andmaybe back into it.
MR. WATTENBERG: If a doctor says, 'This is what God meant for meto do on this earth,' I think we all sort of understand that. But ifa widget salesman says, 'God meant me to sell widgets,' that's okay?
MR. NOVAK: Yeah, it may or may not be true. He may be taking itjust as a job, but a lot of people feel as though, look, this is whatI'm good at it. This is what I do well, this is what I enjoy doing.It's worthwhile doing, people need widgets. It's a very humble thing,but there are lots of humble jobs in the world that you either dowell or you do badly.
MR. WATTENBERG: But the other moral aspect of widget selling isthat you earn your bread, support your family at it. I mean --
MR. NOVAK: Oh, yeah.
MR. WATTENBERG: -- and he might not enjoy widget selling.
MR. NOVAK: Well, that's a different thing. His calling in thatcase may be -- my father was a lot like that for a good part of hislife.
MR. WATTENBERG: Your father?
MR. NOVAK: My father. He didn't like the selling job that he hadto do in certain aspects of it, and it was a grind for him. But itwas Depression period, it was hard, he was very glad to have a job.At least he had a job that made him -- he was selling life insurance-- that helped him to meet people, and he came to think of it as thisis something very important. He saw the effects of a life insurancepolicy if somebody was killed at the mill or something like that. Welived in Johnstown, Pennsylvania, a mill town, and to be able todeliver a check to a widow from a life insurance policy, he began tothink, this is a very old profession and it's a very important one,and this is financial security for people when disaster strikes.
So he changed his mind over time about it. But at first, he hatedit. He hated just the effort of finding new people and trying to sellthem something. Very hard.
MR. WATTENBERG: Is any business, as you call it, a morally seriouscalling?
MR. NOVAK: Well, there's one person, one executive I quote in thebook who was debating between some jobs, and he happened to bestanding in an airport and saw a rack of magazines, 'Playboy,''Penthouse,' whatever. And he was saying to himself, gee, I'm gladI'm not producing those things. So from his point of view, that wasnot something he'd like to spend his life doing. And so I thinkpeople do make that determination. Some things are better than othersin their viewpoint.
MR. WATTENBERG: But if Hugh Hefner was in this chair, in yourchair, he would argue that what he did with 'Playboy' magazine was amorally serious calling.
MR. NOVAK: Yeah, he sure did, in installment after installmentwhen he first started out, practically a philosophy --
MR. WATTENBERG: A pleasure philosophy or whatever.
MR. NOVAK: Yeah, pleasure philosophy.
MR. WATTENBERG: Particularly for Hugh Hefner.
MR. NOVAK: And I don't think that did a great deal of good for thecountry over time. In other words, if the country went down thatroute, good-bye to a capitalist system, good-bye to a democracy.
MR. WATTENBERG: But is the test of --
MR. NOVAK: I just want to say for the system's sake, capitalismrequires a lot of people willing to sacrifice today for tomorrow, atomorrow they may not see, but their children will see. And so it'sreally not compatible with the hedonistic principle. Those are at warwith one another.
MR. WATTENBERG: Why is there so much talk these days aboutcorporate greed?
MR. NOVAK: There's always been talk -- there weren't corporationsin very early history, but there's always been talk of greed. Inalmost all the major religions and all the major literatures, peopleof business have been looked down upon, looked down upon ashucksters, looked down upon as middlemen. I think it was St. Ambroseof Milan once said that, you know, God intended the seas forfishermen, not for merchants. And he had some very nasty words to sayabout merchants.
That's been a constant theme in the pagan West, in the ChristianWest, and it's one reason why in the English language, it's hard tothink of a novel or a playwright or a poet who has a kind word to sayfor commerce or for corporations or for industry. Blake wrote aboutthose 'dark, satanic mills.'
MR. WATTENBERG: You have sort of devoted your life to puttingtogether the idea of religion and economics in some sort of a unifiedfield theory. Is that fair?
MR. NOVAK: Well, I didn't intend to when I first started out, butI got driven to that. I wanted to -- I did want to spend my timethinking about the connections between religion and society. BothJudaism and Christianity are culture-shaping religions. They're likeyeast and dough, and they aim to make religion down to earth andrelevant and part of everyday life. 'Earn your daily bread by thesweat of your brow.' Very early in the Bible, that's the method, andthis is holy work.
So that sort of thing interested me, and how was it expressed insociety? Now, most books on that subject, as you're coming throughcollege and so forth, are written from a socialist point of view.Tawney and Fanfani, and Max Weber on the Protestant ethic and greedand avarice. And the literary people despise it as these are peoplewho buy and sell, mere commerce, and so forth. And literary peopletend to imagine themselves aristocrats of the spirit. They do betterthings than that.
MR. WATTENBERG: Tell me about the role of envy, which is somethingthat I know I've heard you talk about in terms of the Soviet Unionand Eastern Europe, but you also deal with it in this book inAmerica.
MR. NOVAK: The most destructive passion, the one that JamesMadison, whose tie I'm wearing, and others thought was what mostdestroyed republics. It's forbidden seven times in Deuteronomy. Inthe Ten Commandments, 'Thou shalt not covet this, thou shalt notcovet that.' In other words, it's a perpetual, perpetual passion ofhuman beings to bring down others to their own level, to take whatothers have.
MR. WATTENBERG: What was that story you used to tell about envy inthe Soviet Union?
MR. NOVAK: Well, that's a little bit round about, but a cannibalking captures a Frenchman, a Brit and a Russian, and he's going toboil them alive on Monday. They get to do whatever they want on theweekend. The Frenchman wishes a weekend with his mistress, noquestions asked, no promises made. The Brit wishes for a weekendwalking the fields of Oxfordshire with his setter reciting Wordsworthand Shelley. And the Russian wishes that his neighbor's barn willburn down.
So it's a powerful emotion in the former Soviet Union. If you tellthat story in Eastern Europe, everybody roars. There is a deep desireto keep everybody even. It's perpetual, but it was reinforced bysocialism, a kind of philosophy of envy.
And so you have to be careful in any republic that you don'tnourish the seeds of envy. That's why I think executive compensation,if it's very high -- even with ball players and so forth, too -- ifit's very high, it starts generating the fires, stoking the fires ofenvy, which is politically destructive. They might have a very goodargument for it. Michael Jordan is so good that he'll bring out moreattendance than you're ever going to pay him. Just one game is worth20,000 people. I don't know, whatever the number is. So you make agood economic argument.
A CEO like Jack Welsh of General Electric is one in a million. Theright personality, the right financial talents, the right talents forunderstanding technology and for motivating people. It's hard to findpeople -- you can make a good economic argument.
But politically, it just raises the feeling of envy throughout thepublic, and you have to deal -- if you want business to be allowedfreedom, you have to deal with its political problems.
MR. WATTENBERG: Well, so should we accommodate the envy and saytherefore CEO salaries should be limited because it's a politicalnecessity?
MR. NOVAK: I don't know what the precise mechanics of the solutionis. I know it's a serious problem. Our colleague, Irving Kristol, hasbeen talking about this at least 20 years, that it was going to --and it wasn't so bad 20 years ago. It's going to catch up tobusiness. And the procedures by which compensation is set need areally close look. Who are these committees? What's going throughtheir heads? Aren't there other things we can give CEOs? Aren't therehonors we can give them?
If corporations don't have the will of a democratic people behindthem, they'll be throttled. In most countries on this planet, youcan't have free corporations. You know, free air for corporations ismore rare than oil.
MR. WATTENBERG: What happens when the CEO improves the economiccondition of the corporation by downsizing and throwing people out ofwork in East St. Louis, and then picks up $10 million in stockoptions and the other guys are out looking for a job?
MR. NOVAK: Yeah. Well, look, there are two main arguments here.The first one is, the most destructive, evil part of capitalism as asystem is the downsizing part. It's a system of creativity and newtechnology. The underside of that is creative destruction, as theeconomist Joseph Schumpeter called it. A new technology puts out ofbusiness an old one.
When I went up to Syracuse University more than a decade ago, itwas not too long after I think it was Maytag had a big plant upthere. It was gone by the time I got there. New technology -- theyweren't building the kind of washing machines that they had for ageneration or more. It just emptied out. Those jobs are gone. That'san evil, destructive part of capitalism. The only argument for it isa system which generates the new is better than the alternatives,better than the stagnation. But it's not good.
MR. WATTENBERG: And creates jobs.
MR. NOVAK: Yeah. And on the other side of it, we can do a betterjob, now that technology changes so much more quickly and now thatwe've come abreast that that's a -- it's not on a 30-year cycle, it'son 5- or 6-year cycle. We can adjust the policies of firms so thatthey pay more in capital and stock options to their workers so theyhave a little capital nest egg for these bad times that come along.We can do more with the health insurance to make it portable.
MR. WATTENBERG: In the 1980s, there was this movie called 'WallStreet,' and the central character is one Gordon Gecko, who says in aspeech, 'Greed is good.'
MR. NOVAK: 'Greed is good,' he says.
MR. WATTENBERG: Greed is good. Is that what business as a callingis about?
MR. NOVAK: I don't think so. Greed is an excess, greed is an evilpassion, and it usually brings the firm or the person involved in itto grief. No. But what the corporation -- the corporation began,first of all, in monasteries, Egyptian burial societies, then themonasteries, as a form that outlasted individual life, a legal entitythat goes longer than any one individual, that's social without beingpart of the state, independent of the state.
And as that form began to be used in business, began to be the wayin which people took more ideas, raised money to produce them, stockassociations, and so forth, and produce goods, for the first time,the world had a way of sustaining wealth in a sustained andsystematic way. And that meant for the first time in history, youcould take that biblical phrase, 'The poor ye shall always have withyou,' and understand it in a very different way. The vast majority ofthe people of the world do not have to be poor. We can createsufficient wealth so that there's a firm material base undervirtually every man and every woman on this planet. And that's -- theengine is the business -- of that is the business corporation.
MR. WATTENBERG: Isn't the purpose of a corporation to make money?
MR. NOVAK: Yes, to create new wealth, to create new wealth for itsinvestors, for its workers, for the society at large.
MR. WATTENBERG: But yet you talk about a corporation having aconscience.
MR. NOVAK: Well, there is an ambiguity in that. Corporations don'thave conscience, but the people in them do, and that can be appealedto. And that -- and it's there, it's often the leading edge ofconscience in a country. It's often the --
MR. WATTENBERG: In a corporation?
MR. NOVAK: It's often the heads of business -- let's take acountry like South Korea under a dictatorship, as it was when itfirst started experimenting with the American economy. Well, aspeople from small villages who had been born poor showed terrificeconomic talent and became heads of corporations, they began tothink, hey, we're smarter than the general, and they began toenvisage a new Korea -- democratic, representative government. Andthey slowly helped to provide, and especially in small businesses,that spread, they helped to provide the crucial mass that enabledKorea to move toward democracy. You could predict it in advance, asin fact I did, that it was coming.
And I think in the same way in China, you can predict that thespread of business in China is going to lead to a critical mass ofpeople who are going to know that they're smarter than the communistsand the commissars, than the generals, and they're going to demandrepublican government.
MR. WATTENBERG: But what happens when an executive in acorporation is faced with a choice that would be a superior moralchoice versus a choice that, while not illegal, would make more moneyfor the corporation? That's one of the things you deal with in'Business as a Calling.' Where do you come out on that? What shouldit do?
MR. NOVAK: Business is a morally serious thing, and differentpeople handle it differently. You can do good and great good inbusiness, or you can do evil or just snotty, not very good things,maybe not terribly evil. But business is an arena of human activityin which you see very bad things and you see very good things. Nobusinessman can escape it by saying, 'I'm in business, I can't helpit, it's the business way to do it.'
MR. WATTENBERG: Now, wait a minute. But --
MR. NOVAK: Let me give you an example, Ben, a real clear one. ACEO told a group in a seminar, myself included, that he was in a firmthat had a branch in East St. Louis, and that branch in East St.Louis, compared to other plants that they had, was marginal. Anotherguy coming in might close that plant. But he said, 'They're marginal,they're just making it, but they're making it. And given the socialproblems in East St. Louis, I am not going to close that plant aslong as I am CEO of this company. I'm not going to do it. I thinkwe're important to East St. Louis, and we're going to stay there aslong as I can keep it there.'
Another guy might have called it differently. That's what I meanabout the discretion that's there in the business.
MR. WATTENBERG: Here is this marginal plant in East St. Louis.It's barely profitable for this company, all right? The same amountof capital invested in another place will not be marginallyprofitable, but substantially profitable.
MR. NOVAK: Yeah.
MR. WATTENBERG: All right, now, it's one thing to say, 'Well, I'mnot going to close this plant in East St. Louis and all thesepeople's jobs.' But in the modern era, particularly with the role ofpension plans, if he does that morally desirable, wonderful thing, heis taking money out of the mouths of widows and orphans who haveinvested in his stock. So which is the moral way?
MR. NOVAK: Ben, morality is not a cut-and-dried, simple businessin any aspect, any more here. There is sometimes more than one moralthing to do, and people are going to have to make a prudentialjudgment, weighing the good and evil involved in those things, andbank their souls on it. And you could --
MR. WATTENBERG: But you can see --
MR. NOVAK: -- I can see an argument either way on that. In otherwords, if at a certain point you decide, look, I'd like to keep itopen, but this firm is losing money or using money badly here; muchas we'd like to do it, we are not in the end a welfare agency, andinvesting this money somewhere else is going to end up doing a lotbetter for the country, for the business, for the investors, foreverybody else in it, and that's our long-term responsibility -- Ithink that's also a responsible case.
You know, you hate to go through life and be in one moral dilemmaafter another, but that's life, and you define your own character bythe choices you make.
MR. WATTENBERG: Is the purpose of your new book to tellbusinessmen to feel good about themselves?
MR. NOVAK: No.
MR. WATTENBERG: To get rid of the inferiority complex becauseeverybody's beating up on them?
MR. NOVAK: No.
MR. WATTENBERG: No.
MR. NOVAK: No. I don't mind if they do that, but what it is is toset certain ideals for them. I think mostly people in business arequite idealistic. I was stunned when I had my first encounters withbusinessmen, beginning in a steady way some 20 years ago or so. Andif you set ideals for them and show them what's inherent in businessitself as a practice, they'll get more out of themselves morally,politically, for the sake of democracy, for the sake of humanitarianpurposes, and so forth, than otherwise they might. If you didn't talkabout business purely in an economic manner and in terms of thebottom line, but about its moral possibilities and its humanepossibilities. All those things are inherent in business, and theydon't do it.
MR. WATTENBERG: What are the moral possibilities of business, thatthey create more material wealth for people so they can live bettermaterial lives?
MR. NOVAK: Well, that's the first moral obligation of business. Imean, that's what they're founded to do. You know, if they don't dothat, they're misusing the public trust. But beyond that -- well, letme just say one thing they're not doing.
Businesses do most of the commercial advertising on television andso forth. A lot of that is morally schlocky.
MR. WATTENBERG: Schlocky.
MR. NOVAK: It's preaching a hedonism.
MR. WATTENBERG: The advertisement or the shows?
MR. NOVAK: The advertising. Let's start with just the advertising,which the business has control over. I once told Ray Crock atMcDonald's -- he was broadcasting, 'You deserve a break today' -- Isaid, 'Ray, your grandmother didn't believe that.' She was from theCzech Republic, as mine was from the Slovak Republic. I said, 'Minedidn't either.' You know, nothing ever good happened in CentralEurope in the last thousand years. They sort of had the idea that ifsomebody tells you good news, they're pulling your leg. You're gladto get through the day. You not only don't deserve a break today,you're not going to get one, and get used to it.
And I said, 'Besides, if the American people start believing that,'You deserve a break today,' turn out the lights.' I mean, you canonly make this system work, you can only make this company work ifpeople are willing to sacrifice and forgo some pleasures today tobuild for tomorrow. And they're going to be putting some of the --
MR. WATTENBERG: Yeah, but that's not the way to sell hamburgers,Michael. I mean, let's be realistic. I mean --
MR. NOVAK: Well, look. He took -- here's exactly what happened. Hetook the ad off. As near as I can tell, the ad went off for a goodmany months, and then for the reason you said, it came back on. Itworked to sell hamburgers.
But my point remains. Businessmen have a responsibility for themessages they put out, and I don't think they take that veryseriously. I don't think they think about that very much. What I wantto do is call their attention to their responsibilities to thesociety, and you can only make business work in a certain kind ofsociety. Unless you have the right sort of political institutions,unless you have the right sort of habits in the people, you can blowall the corporate hot air you want, it isn't going to work. There arelots of countries in the world where you can't get businesses goingvery well, a majority of countries, so you've got to nourish the kindof culture that makes business possible in the first place.
MR. WATTENBERG: Which is a market, consumption society. I mean --
MR. NOVAK: No, honestly, it isn't. People don't live by breadalone. And people work harder, people are honest, they do a goodday's work in some cultures (more) than in others. And that is aprecious economic resource. The economists are asking, what's itworth to the Japanese to have the kind of work ethic the Japanesehave? It's worth an awful lot. They are moral components, they are aform of human capital of enormous value.
We have them in this country, but we're losing them, Ben. You knowas well as I do that in many -- along many lines, this is not asmorally serious, as morally rigorous a country as it used to be.
MR. WATTENBERG: But I don't know that that's necessarily hurtingour economy. Our economy compared to the Japanese in this last half adecade or so is doing pretty damn well, and compared to theEuropeans.
MR. NOVAK: No, I don't want to undersell that, but at the sametime, our companies are finding it harder and harder to recruitenough Americans -- engineers, to name one subcategory. But AT&Tand other communications companies are having a much harder timefinding the kind of work force they used to find easily, people whoare literate, who are responsible, who have great habits aboutshowing up, who have great courtesy with the public, and so forth.Those things aren't as widespread as they once were. That's a greatcultural resource which I think is being weakened.
In any case, if I'm wrong, I just want the argument addressed andtreated in a morally serious way. People will solve moral problems indifferent ways, but they are morally serious issues.
MR. WATTENBERG: Okay. Thank you, Michael Novak, the progenitor ofa new discipline, the theology of economy.
And thank you. We enjoy hearing from our viewers. Please send yourquestions and comments to: New River Media, 1150 17th Street, N.W.,Washington, DC, 20036. Or we can be reached via e-mail firstname.lastname@example.org or on the World Wide Web at www.thinktank.com.
For 'Think Tank,' I'm Ben Wattenberg.
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'Think Tank' is made possible by Amgen, recipient of thePresidential National Medal of Technology. Amgen, helping cancerpatients through cellular and molecular biology, improving livestoday and bringing hope for tomorrow. Additional funding is providedby the John M. Olin Foundation and the Lynde and Harry BradleyFoundation.
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