Thursday, June 2, 2011

Greedy Nonprofits?

At this point in my libertarian debating career, I am adept at defending greed. Free marketeers like myself recognize the good that can come from unabashed self interest, or more accurately, a collection of individuals engaging in mutually beneficial voluntary transactions in pursuit of their individual self interests. Due to this belief and offshoots of it, I am usedd to arguing with people who like to blame the worlds problems on greed, especially the greed of big, evil corporations and their fat-cat CEO's. What I am not so accustomed to defending in my debates, however, are the big, evil, fat-cat CEO's of charities.Yet that is the debate I found myself in this weekend.

The charity in question was the Red Cross, which although it is a non-profit does have employees. According to this link: , http://urbanlegends.about.com/library/bl_charities_salaries.htm,%20the president of the Red Cross earns $500,000 a year. Many presidents forego the salary. The Red Cross is ran by a 50 person all-volunteer (but some appointed) committee, which votes on the president. It also employs thousands of lower level workers, mostly nurses and the like to help with blood collection. Those workers are now on strike, with the primary area of discontent coming from the lack of health benefits being offered. Other concerns include understaffing and long commute distances leading to fatigue and heightened chances of human error.

Now, I don't blame the workers for going on strike if they feel the work they do is worth more than what is being offered as compensation. I don't have a problem with strikes, or with people holding out for more money (I'll post my thoughts on collecive bargaining in a later post). But I do have a problem with people blaming this strike, and the cancelled blood drives it has created, on greedy executives. Um, hello? IT IS A NON-PROFIT! The executives who run it cannot profit from this labor dispute, they are on a fixed salary! Nothing they give to or withhold from the striking employees will affect how much they make. They, individually, have nothing to gain from withholding health benefis from Red Cross employees; the real reason they're withholding them is because they'd rather see that money go to the actual charity itself. The Red Cross currently gives 93 cents of every dollar donated directly to the cause, and their 7% overhead is a much better ratio than some other charities. That is a number the Red Cross is proud of, and does not want to increase by diverting donation money to health checkups for their nurses and their families. I wholeheartedly agree.

"But Andrew" one of my opponents argued, "it is simply immoral for the leader of a charity to make $500,000 while denying health benefits to children! If they're short of money, the moral thing to do would be to cut his/her own salary instead of the salaries of lower level employees." This logic is flawed in many ways. Firstly, the Red Cross did not cut health benefits which already existed, the union is demanding health benefits which it has never before recieved. So there were no "cuts". We must discern between the act of taking something away and the failure to give that something. Secondly, I garuntee you health benefits for thousands of employees cost tremendously more than $500,000, which means even if the president did cut their salary all the way down to 0 and worked for free, he/she would still have to cut into donation money substantially to provide these benefits.

But thirdly, the mere act of earning money, any amount of money, for any task, can never be immoral so long as the transaction was agreed upon by both parties. Now, the task being carried out can be immoral (see: Hitman), but the wage earned in exchange is not. Immorality cannot exist if nobody is harmed, and if both sides agree to the terms of the arrangement, neither is harmed (or, at least not harmed without their consent). Thus, the "fair" wage is merely the wage set by the principles of supply and demand. The president of the Red Cross, I'd imagine, has an extremely trying, difficult job which requires many diverse skills and distinct qualities. There is a very small supply of people who possess the skill set to adequately complete this job, and an even smaller number who have the time and will to complete it. This makes the salary high, because the work is very valuable to the Red Cross. The Red Cross and the president made a mutually beneficial agreement: the Red Cross wins because they get the job they need to be done filled by a highly capable and amply motivated person, and that person wins because they get a large compensation for their efforts. Each feels the work/money they put in is worth the work/money they get out. All employment is based on these presmises. Since none of the involved parties are harmed by such an arrangement, the salary, no matter how high, cannot be immoral.

Same goes for the employees on strike. I do not blame them or think they are immoral, even though they (unlike the president, who stands nothing to gain or lose from the dispute) are the ones putting their personal profit ahead of the cause. It is their right. If the arrangement is no longer mutually beneficial, they should discontinue it, or ask for the conditions which would make them willing to work. Just as the Red Cross must pay a certain amount to it's executive if it wants to lure capable people into taking the job, it must do the same with lower level employees. But market forces will determine what those amounts are, not morality. If the striking nurses think their work deserves more pay and would fetch them on the open market, good for them for striking. But if they're striking because they "just don't think it's right" that they make so little while their boss makes so much, I think they're full of baloney.

PS - The average corporate CEO in America, which I'd imagine runs an organizaion far less widespread and enormous than the Red Cross, makes $11 million a year. That's what these nonprofit execs could be hauling in if they did for-profit work. Still think they're greedy?

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