In the 80’s, a new word became the mantra of business schools across the country: “profit.” It became the guiding principle for a generation of business students. It certainly makes sense – after all, isn’t profit why a business exists? But in the last year, we’ve seen what happens when business pursues profit outside the context of a moral framework. When a higher motive disappears, and then the government reduces the risk, it’s alarming to see just how far leaders are willing to go in the name of profit.
I had breakfast at the Regency Hotel in New York City Thursday with Chuck Stetson, managing director of PEI Funds. Chuck made an interesting statement. “When I entered the investment world in the 70’s, the idea of investing in cigarettes or gambling just wasn’t done. There was a real sense of moral responsibility in business. But today, as the culture has changed, we’ve lost that sense of personal values, and as a result, we’re experiencing this financial meltdown.”
Daniel Henninger, writing in the Wall Street Journal called it “moral hazard.” The term was coined in the 19th century insurance industry. The French call it “risque moral.” Back then Henninger writes, it meant the hazards people suffered from poor moral judgments in business. Perhaps it’s time we started re-considering the importance of moral hazard once again.
Actor Paul Newman got it right with his company “Newman’s Own.” 100% of his post-tax profits went to charity – $250 million total. He understood the moral responsibility of business, and the world is better because he sold salad dressing.
Hopefully, this terrible financial situation will wake up business leaders to the importance of moral responsibly and social entrepreneurship. And I would call on business leaders who are serious about their religious faith to speak out, because this is the time when people are listening. I would even suggest that we consider the personal debt bondage most Americans live under to be a social justice issue. And what is the legacy we’re leaving to our Children through the national debt?
Chuck Stetson is starting a speaking tour around the country to call attention to the role morality and values should play in financial decisions.
You can do it too. We all need to do it. America is listening.