Tuesday, April 13, 2010

Gratitude and Grace

That is the title of a recent essay by writer and philosopher Roger Scruton. I enjoyed the entire piece, and hesitated to quote a stand-alone passage as the build-up and context are important, but will do so anyways (bold emphasis added by me):

The proper response to a gift, even a gift of charity, is gratitude. People who feel gratitude also wish to express it. The easiest way is to give in one's turn. By giving you pass on and amplify the goodwill that you received. Thus it is that, in America, where the tradition of giving is very much alive, and the state has not yet extinguished the desire or the need for it, people give to their old school, to their university, to the hospital that cured them, to the local rescue service that saved them, and to the veterans who fought for them. They give without seeking or expecting recognition, but simply because gratitude is expressed through giving.

However, the state is taking over many of the functions that were previously performed by charities -- not least education, health care, and the relief of poverty. And the state deals on impersonal and equal terms with its citizens. It has no favorites, and it is governed by the rules -- anything else is received by the citizens as an injustice. Hence charity is replaced by justice as the ruling principle upon which social benefits are distributed. But while charity deals in gifts, justice deals in rights. And when you receive what is yours by right you don't feel grateful. Hence people who receive their education and health care from the state are less inclined to give to schools and hospitals in their turn -- something that is borne out vividly by the figures concerning charitable giving. The spirit of gratitude retreats from the social experience, and in countries like France and Germany, where civil society is penetrated at every level by the state, people give little or nothing to charity, and regard gifts with suspicion, as attempts to privatize what should be a matter of public and impartial concern.

When gifts are replaced by rights, so is gratitude replaced by claims. And claims breed resentment. Since you are queuing on equal terms with the competition, you will begin to think of the special conditions that entitle you to a greater, a speedier, or a more effective share. You will be always one step from the official complaint, the court action, the press interview, and the snarling reproach against Them, the ones who owed you this right and also withheld it. That is the way European society is going, and American society may one day follow it. Agape, the contagious gentleness between people, survives only where there is a habit of giving. Take away gift, and agape gives way to the attitude that Nietzsche called ressentiment, the vigilant envy of others, and the desire to take from them what I  but not they have a right to.

Scruton is correct in may ways. I am in favor of private, interpersonal charity whenever possible, and certainly don't want to go the way of a European welfare state. My view is that we are to act and give first as individuals and families, and then through the communities and institutions we participate in visibly and regularly. Only as a last resort should charity be replaced with centralized government (tax, legal) policies.

Without a visible connection between the giver and the recipient, there is an incredibly important breakdown in human relationships. The giver loses the ability to see the benefits of their the gifts to others and also loses the ability to receive (perhaps selfish) satisfaction for their action. Likewise, the recipient loses the ability to see that their gifts come from the hands of fellow humans, the goodwill and/or sacrifice that entails, and the responsibility and "do right" action it inspires. Diminishing the tangible nature of charity and gratitude produce not only the mistrust and resentment the author outlines, but perhaps most importantly, personal accountability, which can give way to abuse and mismanagement not imaginable on a more personal scale.

Having voiced my agreement with Scruton's writing, I will now try to clarify my position and maybe make a case for the other side of the coin so to speak, lest I be confused for agreeing with everything his essay may imply.

Charity and grace are incredibly important because inequality is a part of the human condition, and countless individuals find themselves in tragic and unfortunate situations through no choice of their own, be it an earthquake, or cancer, or being born in a deplorable environment or to less than ideal parents. This is where the role of charity is so vital, as those more fortunate act out of empathy and concern for the well-being of others, and for their community/society/humanity as a whole, in order to give others the gift of hope, care, or opportunity.

On the flip side of the equation, there are many who find themselves the beneficiary of (at least relatively) wealthy families, advanced economic societies, social institutions, even abundant natural resources that they had no role in creating or determining. Of course, we all make choices as to how we respond and/or take advantage of the situations we find our selves in, but there is no denying that the "playing field" is anything but level. This is important in the Christian worldview, as we are instructed to recognize that all a person's circumstances, abilities, and possessions are gifts from God.

That brings me to my main "BUT" to Scrotun's essay. It is not a rebuttal, but a recognition of a point of tension that the author does not address.

Our society is not only filled with wide diversity and inequality, it is also inextricably interconnected. At least part of the pay Bank CEOs receive come from the overdraft fees of their poorest customers struggling to put food on their tables. At least part of the money made by the management and shareholders of energy companies come from cutting corners on things such as environmental and worker safety (see W. Virginia, water quality, and the recent mine accident). In these cases, it is the poor, the unfortunate, and the environment who are unwittingly or unwillingly the givers to the more privileged, and once again, due to the diminishment of interpersonal relationships, the result is same: ingratitude, entitlement, resentment, false claims, and lack of personal accountability.

Justice is very important.

Those with money and power have a much easier time in making their interests heard and acted upon than those on the opposite end of the socio-political spectrum. In this respect I disagree with the author that "the state deals on impersonal and equal terms with its citizens. It has no favorites, and it is governed by the rules." It is the role of justice, and this includes but is not limited to the government variety, to make account where trust, accountability, and reciprocity fail, especially with respect to those without the voice, means, or ability to do so for themselves.


John said...

Thanks for posting. It's thought provoking. If I were to disagree, it would be the next to last paragraph of your post. I don't believe that the "rich" dishonestly profit off the backs of the "poor." You could find instances, but it's certaintly not enough to raise it as a equivalent counterpoint.

Justus Hommes said...

Equivalency is not required. Setting aside how often it happens, we can agree it does happen, and my argument would remain that a mechanism for justice is important.

Whether we are talking criminal justice or social justice, government should protect against abuses of power and privilege.

Professor J A Donis said...

"At least part of the pay Bank CEOs receive come from the overdraft fees of their poorest customers struggling to put food on their tables."
Could you show me one instance in which this happened to be the case?

Justus Hommes said...

I don't understand your question. Are you asking me to explain how salaries and bonuses are paid from a company's revenue? That seems pretty self-evident.

My point is that the larger and more bureaucratic an organization (public or private) becomes, the ability to maintain flexibility, accountability, and positive relationships diminishes.

It is an inverse correlation with very few exceptions. The Italian grocer in 1930's Brooklyn could make a decision to extend credit to a poor Angela McCourt trying to feed a houseful of kids. Try going into any national grocer today and telling them "I'll pay next time."

Individual good intent and behavior is replaced with corporate policy and compliance. This is NOT necessarily a bad thing at all. It can actually be very good. But there CAN be negative social consequences as a result. I happen to believe it is important to pay attention, acknowledge, and respond, whereas most of my free-market brethren would either respond with a "meh" with matching shoulder shrug, or attempt a utilitarian argument of the overall positives outweighing the negatives, which evades the issue entirely.

The negatives should not have to be equal or greater to the positives in order to be worthy of attention.

Professor J A Donis said...

I'm not sure how you could have misunderstood my question. But I will rephrase my question for clarity.

Here is what you said:
"At least part of the pay Bank CEOs receive come from the overdraft fees of their poorest customers struggling to put food on their tables."

You are claiming that part of the pay comes DIRECTLY FROM overdraft fees. I want you to show me an example or two of this in the real world, not just mere conjecture. How do you know that a part of their salaries come from overdraft fees comes from THE RICHEST who have delayed their pay, rather than from the poorest, as you claim? How do you know it does not come solely from profits? How do you know it does not come solely from investment returns? In other words, you are claiming that out of all the variables included in the CEO's pay, one of them is overdraft fees. Show me the proof. (Blame it on Ayn Rand and Roman law for being so "evidentiary."

Anonymous said...

Justus can certainly speak for himself, but if we are being particular and evidenciary, he did not say that the pay for CEOs comes DIRECTLY from the overdraft fees. I am not a CEO, but I don't believe that their pay comes DIRECTLY from any source. Bonuses are typically based on achievement of certain financial goals and profit margins. A profit margin is based off of an overall balance sheet which includes all income and expenditures for the company. This would obviously include overdrafts for all customers. Therefore in part, a CEOs compensation is based on overdraft fees from its poorest customers.

Professor J A Donis said...

Nice try. I asked for a concrete example, not more conjecture. Do you have an example or not?

Anonymous? said...

Professor, first thank you for the compliment on my previous post. I thought it was a good effort as well.

My initial point, and one you avoided, was that you are putting words (i.e. "directly from") into Justus' mouth that he did not say. Of course, as I am not Justus (although I often wish I was), I should refrain from any further comment on what he did or did not mean exactly.

As to your request for a concrete example, I think you are being a little overbearing on one sentence and missing the point of the overall argument. I believe that if you remove the one sentence that bothers you, you can still understand the point Justus is making.

However, I can tell you this. At my company, which is publicly traded, our bonuses are based off of the "conjecture" I described above. I know this to be true for sales executives, managers, directors, and vice-presidents. I say "know" because they have told me this. I am assuming you will allow thier word to count as concrete evidence of a fact. It is a logical and rational connection to make that the CEO is compensated along the same structure. I would go ask him personally, but I am pretty sure he will not discuss his pay with me.

At this time, that is the evidence I can offer to you.

Dr. RosenRosen said...

Professor, surely one of your colleages at your university teaches a corporate accounting course. You could audit the class to learn the basic accounting principles that will help you answer your question. That's probably the easiest way for you to learn how corporate balance sheets work in the detail you seek. I can tell you that typically, unless a company's receipts or the proceeds from credits are earmarked to serve a specific purpose, all receipts are comingled into a firm's operating account(s) in exactly the way Anonymous? mentioned. Where it gets tricky is when there are multiple business units and there are intra-corporate loans or cash transactions that make it virtually impossible to determine where receipts end up.

If you want more detail, there is a wealth of publicly-available information provided by banks and other corporations in the form of filings with the IRS and SEC, as well as various tools for investors such as prospectuses (prospecti?). If that still doesn't satisfy your curiosity, you'll have to talk to the bank's comptroller or conduct your own forensic audit of the bank's books to find out exactly where the proceeds from a particular transaction go once they are received by the bank.

Professor J A Donis said...

So in essence, there is no telling from where exactly the CEO's pay is coming. Any portion of his pay could come from the overdraft fees of their poorest customers, just as the lowest paid employee of that bank may be receiving part of his pay from the same overdraft fees.

(I'm just picking a fight, guys. I didn't think you'd take it to heart. LOL)

Anonymous? said...

Professor, you are correct, there is no "direct" line from any individual revenue to the CEO's compensation, but it does follow that any revenue is in some way related to his compensation. Just as it would follow that some of his pay would come from the richest (maybe richer than him) customers.

As to picking a fight, no problem, we were just fighting back. Nothing's personal on the blog.

Anonymous said...

Having worked for Washington Mutual Bank in years past, I can provide a real-life example. Overdraft fees were an important source of revenue. Counter-arguments would be that the this revenue was used to off-set negative balances from overdrafted accounts that were never paid back. And you could also argue that WaMu provided a service that most other institutions were not willing to do (i.e. serve the underserved). So while it is a real-life example of someone named Kerry Killinger and others getting rich at the expense of those less fortunate (at least a majority of them were), it is an imperfect one.

That said, I am more inclined to agree with the Professor in the point that I think he is making. That upon seeing a fat man next to a skinny man, we assume that the man became fat by stealing rations from the skinny man. He is merely asking for proof that the fat man did in fact take from the skinny man to feed himself more than he needed. He wants evidence from these types of examples, and more often than not there is just conjecture. Many think that we live in a zero-sum gain world and that is simply not the case.

But I also do not deny the underlying truth in the diagnosis Justus provides, that the poor "unwittingly" tend to be givers to the more priviledged. The true-to-life examples I would provide would be casinos and state lotteries. This is a zero-sum gain proposition. Though it is a choice made willingly, it inevitably evolves into a tax on the poor (and those with below average IQ). Sure, there are wealthy who pay this voluntary tax, but the poor tend to pay the greater portion. If you need empirical evidence, you can find more from the U of I professor that provided the quote for the NYT article below.

From "Against the Gods, The Remarkable Story of Risk" (Peter L. Bernstein, 1998, p. 13): "An article in the New York Times of Sept. 25, 1995, datelined Davenport, Iowa, reports that gambling is the fastest growing industry in the United States, 'a $40 billion business that draws more customers than baseball parks or movie theaters.' The Times cites a University of Illinois professor who estimates that state governments pay three dollars in costs to social agencies and the criminal justice system for every dollar of revenue they take in from the casinos--a calculus that Adam Smith might have predicted."

Justus Hommes said...

Thanks for the comments, Anonymous? and Anonymous, who I presume are different people.

My intent was simply to make clear that the loss of transparency, graciousness and accountability can happen just about anywhere that scale becomes an issue, both in the private and public sector, financially and socially.

Many people decry the bloated size of government but defend the bloated nature of corporations, while many others decry evils of capitalism while advocating for state solutions. In then end, size and scale pose many of the same advantages and disadvantages to both.

Of course there are dramatic differences as well. In a perfectly free market, a bloated corporation that loses an appreciation for it customers would be punished more easily in the market than would be possible with government (even with elections promising change, what real alternative is there?), but as I have attempted to document over the last year, the marketplace is compromised when government is allowed the power to pick winners and losers, and regulations become tools used by private sector oligarchs to reduce competition.

To that end, I will try to get a new related post up soon.