Tuesday, October 11, 2011

A refresher course in capitalism

last week, I was talking to reader Tim and I was telling him how I have four great references in my car that I keep available at any time.

1) The US Constitution
2) Ronald Reagan's 1964 convention speech
3) PJ O'Rourke's address to the Cato Intitute
4) The Northwood University President's address to their graduates

Seriously, if you can get a liberal to read these things (a big "if" mind you) you've got a conservative on your hands. Of course, most liberals already know everything which is why it's so difficult to get them to read these.

None the less, As I was talking to reader Tim, it dawned on me that I need one additional item in this mix.

The TJ Rodgers response to Sister Doris' request for a more socially conscience company.

It's really a work that deserves attention today (written in 1996) given the Occupy Wall Street protestors demands.

Here's a taste............

My views aside, your requirements are -- in effect -- immoral. By "immoral," I mean "causing harm to people," a fundamental wrong. Here's why:

I presume you believe your organization does good work and that the people who spend their careers in its service deserve to retire with the necessities of life assured. If your investment in Cypress is intended for that purpose, I can tell you that each of the retired Sisters of St. Francis would suffer if I were forced to run Cypress on anything but a profit-making basis. The retirement plans of thousands of other people also depend on Cypress stock -- $1.2 billion worth of stock -- owned directly by investors or through mutual funds, pension funds, 401k programs, and insurance companies. Recently, a fellow 1970 Dartmouth classmate wrote to say that his son's college fund ("Dartmouth, Class of 2014," he writes) owns Cypress stock. Any choice I would make to jeopardize retirees and other investors from achieving their lifetime goals would be fundamentally wrong.

  • Consider charitable donations. When the U.S. economy shrinks, the dollars available to charity shrink faster, including those dollars earmarked for the Sisters of St. Francis. If all companies in the U.S. were forced to operate according to some arbitrary social agenda, rather than for profit, all American companies would operate at a disadvantage to their foreign competitors, all Americans would become less well off (some laid off), and charitable giving would decline precipitously. Making Americans poorer and reducing charitable giving in order to force companies to follow an arbitrary social agenda is fundamentally wrong.
  • A final point with which you will undoubtedly disagree: Electing people to corporate boards based on racial preferences is demeaning to the very board members placed under such conditions, and unfair to people who are qualified. A prominent friend of mine hired a partner who is a brilliant, black Ph.D. from Berkeley. The woman is constantly insulted by being asked if she got her job because of preferences; the system that creates that institutionalized insult is fundamentally wrong.
Finally, you ought to get down from your moral high horse. Your form letter signed with a stamped signature does not allow for the possibility that a CEO could run a company morally and disagree with your position. You have voted against me and the other directors of the company, which is your right as a shareholder. But here is a synopsis of what you voted against:
  • Employee ownership. Every employee of Cypress is a shareholder and every employee of Cypress -- including the lowest-paid -- receives new Cypress stock options every year, a policy that sets us apart even from other Silicon Valley companies.
  • Excellent pay. Our employees in San Jose averaged $78,741 in salary and benefits in 1995. (That figure excludes my salary and that of Cypress's vice presidents; it's what "the workers" really get.)
  • A significant boost to our economy. In 1995, our company paid out $150 million to its employees. That money did a lot of good: it bought a lot of houses, cars, movie tickets, eyeglasses, and college educations.
  • A flexible health-care program. A Cypress-paid health-care budget is granted to all employees to secure the health-care options they want, including medical, dental, and eye care, as well as different life insurance policies.
  • Personal computers. Cypress pays for half of home computers (up to $1,200) for all employees.
  • Employee education. We pay for our employees to go back to school, and we offer dozens of internal courses.
  • Paid time off. In addition to vacation and holidays, each Cypress employee can schedule paid time off for personal reasons.
  • Profit sharing. Cypress shares its profits with its employees. In 1995, profit sharing added up to $5,000 per employee, given in equal shares, regardless of rank or salary. That was a 22% bonus for an employee earning $22,932 per year, the taxable salary of our lowest-paid San Jose employee.
  • Charitable Work. Cypress supports Silicon Valley. We support the Second Harvest Food Bank (food for the poor), the largest food bank in the United States. I was chairman of the 1993 food drive, and Cypress has won the food-giving title three years running. (Last year, we were credited with 354,131 pounds of food, or 454 pounds per employee, a record.) We also give to the Valley Medical Center, our Santa Clara-based public hospital, which accepts all patients without a "VISA check."

Read the whole thing...........

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