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It turns out that we do this all the time. There are many actions that we consider to be good
to do, but we don’t judge them by our bottom line. For instance, if you were my friend and I
asked you to drive me to the airport, I bet you would do it. What would be your reaction if,
when we got there, I tried to hand you $50 for your time? I think you would probably be a bit
hurt that I was trying to “buy” your friendship. And the more I insisted, the more you would
be hurt.
Of course, what if you were a taxi driver and you took me to the airport, and I gave you a warm
smile and a friendly handshake and said, “Thanks. Thank you SO much. What a great
trip. Let’s get together again soon. Maybe with the families next time?” I’d
never see my luggage!
The reason is that a friend acts not out of investment strategy, but out of the duty one owes to
one’s friends. This is an “intrinsically” beneficial thing. A taxi driver, on the other
hand, acts out of the “instrumental” value of being paid. There is nothing wrong with being a
taxi driver, or doing things for their instrumental value, but having an ethical organization is
more like being a friend than like being a taxi driver.
There are things that are good investments, but that we don’t do for moral reasons. Hiring
child labor would be very efficient. They have small fingers to do delicate tasks, they don’t
eat much, they need little space, and they have lots of stamina. But we have decided that
putting our children to work is not acceptable.
Selling contaminated food could be a money-maker. It is easier to produce, you don’t have to
worry about shelf-life, and you need less energy for refrigeration in storage and transport.
A good investment, but not something we are going to do.
There are also some things that turn out to be poor investments that we do all the time. I
enjoy giving a lecture on “The Cost-Benefit Analysis of Having Kids.” The costs are
enormous. For housing, food, transportation, clothing, healthcare, schooling and other
miscellany, the bottom line is that it takes $269,520 to raise a kid to the age of 18, and then
comes college!
And what are the “monetizable” benefits of having kids, those that we can turn into hard
numbers? Early on, kids will fetch for you, and they give you some tax benefits, and they
might contribute to the family income, although there we are running into the child labor thing
again. Certainly, kids are an annuity for your old age, but a good economist will tell you
that, since that will take place in the future, you have to discount that by (1) the probability
that the child is still alive during your old age, (2) the probability that he or she can afford to
take care of you, and (3) the probability that he or she still likes you well enough to take care
of you. When you deduct for those probabilities and then do a “net present value”
calculation, you find what you knew from the beginning - nobody has kids to get rich. And
yet, we do it all the time.
As we said earlier, there are benefits to developing an ethical organization. But they are
beside the point. Developing an ethical culture and making ethical decisions is more like
having kids than it is like real estate investment. You do it for its intrinsic rewards, not
because of the future gain.
So, what would such a program look like? That is the subject of our next article.
© Daniel Swartzman
2010
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