Month: February 2015

This blog grew out of a crazy idea I started having years ago that really solidified while I was in law school. I started wondering what would happen if a person got really  serious about giving up the profit of a successful business and instead spent that money on increasing salaries and driving down the cost of goods and services as much as possible.

The more I thought about it the more excited I got. Because there’s a lot of good you can do when you’re interested in other people.

I’ve always been an idealist. I remember the first time I read Les Miserables. I was captivated by the change that came over Valjean after Bishop Myriel gives him the silver.

But this idea only works if the person (or people) who make the decision to stop chasing profits do it willingly. It’s not a form of socialism, neither is it communism. Those political and economic theories are based on a fundamental ideal in which the government imposes restrictions—whether with a light touch or a heavy—on the freedom of individual citizens.

This idea depends on its participants freely making an effort to sacrifice some part of their capacity, their earning power, and ultimately their hearts, to making the lives of those around them better. It’s a radical change in attitudes that changes the lives of both those who make the change and those who benefit from it.

Dave Ramsey is a brilliant leader. He teaches millions of people how to get out of debt, often mountains of debt, using the most fundamental financial tools available. One of the most powerful elements of his radio show happens when his listeners call in to give a “debt-free scream.” I literally get chills every time I hear the passion in those callers’ voices. This part of his show is so powerful precisely because it convinces his listeners that the radical changes he preaches actually do work.

The changes I’m advocating for here are just as radical, and they demand every bit as much “gazelle intensity” as Dave works to inspire in his audience. No employer will rationally give up her annual profits in the name of paying the highest wages possible unless she is totally convinced of the intrinsic value of that decision. And no employee will recognize the true humility of that sacrifice unless he understands the commitment that leads his employer to give up what is rightfully hers to withhold.

In short, I’m out to change the world.

And that’s crazy.

Business, at its best, transcends capitalism.

Ask the average 25-year-old college student what “capitalism” means and you’re likely to get an earful about European socialist democracies, Marx, and the immorality of capitalism (delivered, no doubt, from behind an Apple Macbook with a Starbucks coffee close by). Ask the average 52-year-old and you’re much more likely to hear about Reagan, trickle-down economics, and so forth (you’re probably equally likely to find a Macbook and a Venti Mochafrothything close at hand).

There’s very little to be gained by engaging in that argument here. Instead I’ll define capitalism as it’s most commonly practiced in the United States today: an economic system loosely based on the principles laid out by Adam Smith in which capital (in the form of cash or hard assets) is used to build a business for the purpose of maximizing profits for the owner or shareholders of that business.

Over time we’ll explore the consequences of capitalism as it’s practiced today. But from the beginning, I want to be clear:

Business, at its best, transcends capitalism.

That transcendence happens when a business turns its focus from maximizing profits to maximizing its positive impact on lives of its employees and the public at large. Many great contemporary thinkers have approached this idea. From the “gift economy” to the current fascination with social entrepreneurship, many more have nibbled a the edges of this principle.

Others have understood it better. Henry Ford apparently recognized it when he created the “Five-Dollar Day” for his employees in 1914. Seth Godin advocates brilliantly for it when he encourages business leaders (and each of us) to develop “linchpins” in their organizations. (Just go read Seth’s Linchpin, it really is brilliant, and this blog won’t get any better while you’re away). Patrick Lencioni’s description of how to improve our organizations in The Three Signs of A Miserable Job is just as inspiring.

Using biblical language from the Book of Matthew, Joseph Smith once described this idea as well. No doubt because I’m a Mormon, I find his description particularly compelling. Joseph explained that business should be organized so that “every man may improve upon his talent, that every man may gain other talents . . . [e]very man seeking the interest of his neighbor, and doing all things with an eye single to the glory of God.”

A brief example illustrates. Basic capitalist thought teaches that an employer should pay his employees the very least he can convince his employees to take. The employer’s profit is thus equal to the difference between the cost of the employee’s time and what the employer can charge for that time. This makes sense; it maximizes the employers profits and it feels very much like the explanation of that basic demand/supply curve our favorite economics teacher told us all about.

The problem is, it’s wrong.

A much better result occurs when the employer instead approaches the question of wages by asking “what is the most I can pay my employees while still earning a reasonable profit.” In the end, the wages she pays may not be any different from those paid by the employer in my last example. But very often they will be. And more importantly than that, when this approach is made explicit, the employer gains the trust and loyalty of an employee.

The effects of this loyalty are far-reaching, but they’re only available to the extent a business is willing to set aside profit as its primary motive. So I say again:

Business, at its best, transcends capitalism.

P.S. Happy Ruckusmaker Day!

 

I’m a 30-something lawyer working for a fast-growing tech startup. I read a lot. For work and for church and for pleasure.

Lately, I’ve been reading a lot of business books. I used to think they were hokey. Some still are. But there are a few that have started to help me put words around ideas I’ve had since I walked into my first economics class as a freshman at Brigham Young University.

These ideas have been influenced by so much that I’ve read. Everything from Victor Hugo to J.R.R. Tolkien to Jeffrey R. Holland to Milton Friedman.

Over the next year, I hope to sketch out a vision that can change the way we live and do business. They’re not new ideas, they’re not even all my ideas. I’m just hoping that maybe I can put them together somewhere where you can look at them all together—take them down and work with them—and see what I see.

 

A few weeks ago, a person I admire told me “Go make your ruckus, sir.”

A few days later, a radio personality started talking about things I’ve been saying for years, and I was irritated that I’d been scooped.

Tonight, for the hundred-millionth time, I sat telling my wife about these ideas that I have that seem so crazy but that I can’t seem to let go. And she told me that I should start telling people about them.

So here I am.

Not here we are, because you’re not here yet. Maybe you’ll never be here. But I’m going to write the things I keep thinking about and then I’m going to tell everyone I know where to find them. And then maybe one of these days you will be here and I’ll say something that resonates with you the way it resonates with me and you’ll share it.

I hope that when you do, you’ll share this blog. Because ultimately, this blog (like all blogs worth reading) is about giving people a place to gather and communicate.

Because there’s a better way for us to live. There’s a better way for us to interact with each other, to think about each other, and to help each other.

Something better than capitalism.