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BW Businessworld

The Virtue Merchants

True virtue lies mostly in also being nice to those who are neglected by others

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In about every hotel chain, from Argentina to Kazakhstan, the bathroom will have a sign meant to get your attention: protect the environment. They want you to hold off from sending the towels to the laundry and reuse them for a while, because avoiding excess laundry saves them tens of thousands of dollars a year. This is similar to the salesperson telling you what is good for you when it is mostly (and centrally) good for him. Hotels, of course, love the environment, but you can bet that they wouldn’t advertise it so loudly if it weren’t good for their bottom line.

So these global causes — poverty (particularly children’s), the environment, justice for some minority trampled upon by colonial powers, or some as- yet- unknown gender that will be persecuted — are now the last refuge of the scoundrel advertising virtue.

Virtue is not something you advertise. It is not an investment strategy. It is not a cost- cutting scheme. It is not a bookselling (or, worse, concert- ticket-selling) strategy…

Simony 
At some point in history, if you had money, you could part with some of it to exonerate your sins. The opulent could clear their conscience thanks to the purchase of ecclesiastical favors and indulgences, and while the practice peaked in the ninth and tenth centuries, it continued in a milder and more subtle form later, and most certainly contributed to the exasperation with church practices that led to the Reformation.

Simony was a convenient way for the church to raise funds, by selling offices, and everybody was happy with the arrangement. Same with indulgences: the buyer had an inexpensive option on paradise, the seller was selling something that cost nothing. It was, as we call it in trading, “free money.” Yet technically it was a violation of canon law, as it commuted something temporal for the spiritual and intemporal. It was most certainly Lindy compatible: technically, indulgences were not markedly different from the pagan practice of giving offerings to propitiate the gods, a part of which went to line the pockets of the high priest.

Now consider publicly giving a million dollars to some “charity.” Part of that money will be spent to advertise that you are giving money, a charity being defined as some organization that aims to make no profit, and to “spend” a chunk of the money on its specialization: meetings, future fundraising, and multiplicative intercompany emails (all meant to help a country after an earthquake, for instance). Do you see any difference between this and simony and indulgences? Indeed, simony and indulgences reincarnated themselves in lay society in the form of charity dinners (for some reason, black tie), of people feeling useful engaging in the otherwise selfish activity of running marathons — no longer selfish as it aims at saving other people’s kidneys (as if kidneys could not be saved by people writing checks to save kidneys), and of executives giving their names to buildings so they could be remembered as virtuous. So you can scam the world for a billion; all you need to do is spend part of it, say, a million or two, to enter the section of paradise reserved for the “givers.”

Now, I am not saying that all those who put their names on a building are necessarily non-virtuous and buying a spot in paradise. Many are forced by peer and social pressures to do so, so it could be a way to get some people off their backs.

We have argued that virtue is not an ornament, not something one can buy. Let us go a step beyond and see where virtue requires skin in the game in terms of risk taking, particularly when it is one’s reputation that is at risk.

Virtue Is About Others And The Collective 
From the scaling property, we can safely establish that virtue is doing something for the collective, particularly when such an action conflicts with your narrowly defined interests. Virtue isn’t in just being nice to people others are prone to care about.

So true virtue lies mostly in also being nice to those who are neglected by others, the less obvious cases, those people the grand charity business tends to miss. Or people who have no friends and would like someone once in while to just call them for a chat or a cup of fresh roasted Italian-style coffee.

Take Risk 
Finally, when young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro- level, my suggestion is: 1) Never engage in virtue signaling; 2) Never engage in rent-seeking; 3) You must start a business. Put yourself on the line, start a business.

Yes, take risk, and if you get rich (which is optional), spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move the descendants of Homo sapiens away from the macro, away from abstract universal aims, away from the kind of social engineering that brings tail risks to society. Doing business will always help (because it brings about economic activity without largescale risky changes in the economy); institutions (like the aid industry) may help, but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming).

Courage (risk taking) is the highest virtue. We need entrepreneurs.

With permission from Penguin Random House


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