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Free Minds & Free Markets

The Hottest Midterm Race Is Milton Friedman Versus Marc Benioff

A billionaire progressive CEO and a dead free-market economist walk into a bar.

Of all the high-profile political contests on the ballot this week—Ted Cruz versus Beto O'Rourke in Texas, Stacey Abrams versus Brian Kemp in Georgia, Dean Heller versus Jacky Rosen in Nevada—the one that may be the most consequential, long-term, is Marc Benioff versus Milton Friedman.

Benioff is the new owner of Time magazine and is the founder and chairman of Salesforce, a software company based in San Francisco. Bloomberg estimates his wealth at about $6 billion.

Friedman is the Nobel Prize winning economist who spent a career teaching at the University of Chicago and then joined the Hoover Institution at Stanford. He died in 2006 in San Francisco.

Neither Benioff's name nor Friedman's is on the ballot. What is on the ballot, though, at least in the City of San Francisco, is Proposition C, which would raise business taxes there by an estimated $250 million to $300 million a year for the purpose of providing housing and services to homeless people.

Benioff has emerged as the proposition's most prominent public advocate, and he's also achieved the rather remarkable feat of maneuvering Friedman, posthumously, into the position of a kind of cartoonish lead spokesman for laissez-faire capitalism.

The advantage of this tactic for Benioff is that Friedman, having been dead for a dozen years, isn't around to defend himself or to challenge Benioff to a debate. Friedman's argument, though, is so much stronger than Benioff's that by the time this one is over, the Salesforce billionaire may be wishing he left Friedman out of it.

Benioff has been escalating his feud with Friedman's memory for years. In a 2014 commencement address at the University of Southern California, Benioff enthusiastically quoted General Colin Powell, "I've brought you here today to tell you something very important, that Milton Friedman was wrong, that the business of business is not business." Never mind that that's not even a Milton Friedman quote but a mangling of one from President Calvin Coolidge, or maybe a Harvard Business School professor, Theodore Levitt.

In a February 2015 article for the Huffington Post, Benioff wrote, "The renowned economist Milton Friedman preached that the business of business is to engage in activities designed to increase profits. He was wrong. The business of business isn't just about creating profits for shareholders—it's also about improving the state of the world and driving stakeholder value."

And in a recent New York Times op-ed arguing for the San Francisco tax increase, Benioff again started up with Friedman: "'There is one and only one social responsibility of business,' the economist Milton Friedman famously wrote in 'Capitalism and Freedom': 'to increase its profits.'"

Benioff went on to quote a New York Times magazine article Friedman wrote in 1970. Benioff called the article's argument "myopic." That struck me as a cheap shot at Friedman, who was well known for his large, thick eyeglasses.

The San Francisco tax situation is a perfect example of why Friedman has, by far, the clearer view of this one. Benioff argues for the tax on two main grounds. The first is self-interest of the businesses. "The real threat to business comes from the homeless crisis itself," he writes. "If employees can't walk safely to work, companies might think twice about locating in the city."

That line of argument, though, isn't in conflict with Milton Friedman. If a business is genuinely threatened by a social issue, management is justified in spending money to try to fix the issue, as Friedman put it, right up to "the amount that is in the best interests of the corporation." Management could decide to move offices elsewhere. It could hire security guards. It could decide to pay workers more to compensate for the risk or hassle of a large street homeless population. It could decide to spend money on housing the homeless or on providing them services. The best solution might also take into account the company's reputation, which also helps attract customers, shareholders, and employees. All this is perfectly consistent with pursuing long-term profits.

A second line of argument by Benioff appeals not to self-interest, but to altruism. He frames the appeal in terms of generosity. "It's time for the wealthiest businesses and business owners to step up and give back to the most vulnerable among us," he writes.

There, at least when he refers to "businesses" rather than "business owners," Benioff runs afoul of Friedman, and of logic. Because when money from a business is taxed—even at the behest of a CEO such as Benioff—it's not a voluntary "give," but a mandatory "take." And, crucially, the money being taken away isn't just Benioff's. As Friedman pointed out, such funds might have been used to provide higher returns to shareholders, higher wages to employees, or lower prices to customers. Each of those constituencies might, in turn, have causes that they put higher priority on than reducing street homelessness in the city of San Francisco.

It's a sad day when our leading CEOs, commencement speakers, and newsmagazine proprietors—or, in the case of Benioff, all three things in one—don't comprehend the 50-year-old insights of a Nobel-laureate economist. Or maybe it's a happy day that the ideas of that economist are so influential and durable that, even a dozen years after his death, the Benioffs of the world are still trying unsuccessfully to rebut them. It'll be interesting to see where the voters of San Francisco come out on the question this week. My money's on Milton Friedman.

Photo Credit: Pauline Lubens/MCT/Newscom

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  • Leo Kovalensky II||

    It'll be interesting to see where the voters of San Francisco come out on the question this week. My money's on Milton Friedman.

    I'm not sure betting on San Fraciscans to vote with reason and/or logic is the best bet to make.

  • A Thinking Mind||

    Gotta give it to Benioff: If your arguments are too weak to defeat your opponent, just wait until they're dead and they won't out-argue you anymore.

  • ThomasD||

    When you consider that he essentially created facebook-for-corporations the pattern should become apparent.

  • Diane Reynolds (Paul.)||

    It'll be interesting to see where the voters of San Francisco come out on the question this week. My money's on Milton Friedman.

    My money's on San Francisco doing what San Francisco always does.

  • BestUsedCarSales||

    At least if they become entirely overrun with homeless they'll be one step closer to their namesake.

  • Red Tony||

    Joshua Norton?

  • Chipper Morning Baculum||

    "'There is one and only one social responsibility of business,' the economist Milton Friedman famously wrote in 'Capitalism and Freedom': 'to increase its profits.'

    Business has no social responsibility, because it has no agency. A business is just a particular way of organizing human relations. A businessman, on the other hand, may have social responsibility. And guess what, different business people will have different motivations, preferences, and social responsibilities. Some will put profit above everything, but most will not.

  • Jimothy||

    Yeah, yeah, yeah. But what if there was a way of forcing them all to do what I think is important?

  • Sevo||

    "Some will put profit above everything, but most will not."

    And some will attempt to force others to do as they do. But since you're a lefty who craves power, it's no wonder you left that out; bad optics, right?

  • Lester224||

    Ad hominem. Are you debating the capability of executives of a company to set company policy? Or are you debating the rights of an executive to say things that may influence other executives.

    Businesses tend to adapt the public policy preferences of the majority of their customers. That's the way to make money. If you don't like the policy positions businesses take, fight back with your wallet and don't give them your business.

  • Cynical Asshole||

    It'll be interesting to see where the voters of San Francisco come out on the question this week. My money's on Milton Friedman.

    My money's on the idiocy of San Fransisco progs.

  • Jerryskids||

    I thought this election's hottest race was the same race it's always been - those who wish to ride and those who wish not to be ridden.

  • Sevo||

    "It'll be interesting to see where the voters of San Francisco come out on the question this week. My money's on Milton Friedman."

    If so, it'll be the first time I voted for the winning side of a tax issue.

  • Eric Bana||

    Let's look at the math if the tax hike passes. Assuming it will raise $250 million and that there are 7,000 people who are homeless in San Francisco, that comes to over $35,000 per homeless person. This is in addition to current funds that are meant to solve the problem of homelessness.

    If the tax hike passes and people eventually still say the city needs moar money to solve the homeless crisis, point this out to them and hopefully some people will realize that throwing more tax money at those government programs isn't the best alternative; and that bureaucrats instead can start by figuring out how to use the satisfactory amount of funds they already take in.

  • Sevo||

    Eric Bana|11.5.18 @ 6:21PM|#
    "Let's look at the math if the tax hike passes. Assuming it will raise $250 million and that there are 7,000 people who are homeless in San Francisco, that comes to over $35,000 per homeless person. This is in addition to current funds that are meant to solve the problem of homelessness."

    Currently, the SF city gov't already wastes ~$35K/annum on the bums.

  • vek||

    It's insane. We're ALMOST this bad in Seattle. IIRC it's $20 something thousand a head per year.

  • Paloma||

    They couldn't rent them one bedroom condos for $20K a year?

  • Paloma||

    They couldn't rent them one bedroom condos for $20K a year?

  • vek||

    In Seattle??? Probably not. Not in the city anyway, in some of the burbs. But you'd still have to feed them, clothe them, keep electricity on, supply them with free heroin needles, etc!

    Importing homeless people from all over the country is expensive man!

  • ||

    "The real threat to business comes from the homeless crisis itself," he writes. "If employees can't walk safely to work, companies might think twice about locating in the city."

    Translation:

    "That's a nice business ya got there. Be a shame if something happened to yer peoples on their way to work."

    And, yes, in my head, I hear it in the Cagny voice.

  • ||

    "It's time for the wealthiest businesses and business owners to step up and give back to the most vulnerable among us,"

    And now it's time to play: Who Said It? Media Mogul or Ayn Rand Villain? WIn a fun-filled trip to the sunny worker's paradise of Venezuela!

  • Migrant Log Chipper||

    Friedman wiped the floor with Chomsky, having seen Benioff the rent seeking crony on CNBC he wouldn't stand a chance with Uncle Miltie.

  • Sevo||

    Per my post last week, if I owned Sf stock, I'd be pissed.
    IF his product benefits from early actor like Google, loading the taxes on it may help a new company based in, oh SSF, beat the pants off Sf.
    If the product already had competition, this just loads the deck in their favor.
    All for something which benefits the company not one iota.

  • Sevo||

    Related:
    Pretty much backed by the SEIU and/or related union thugs, Prop 8 on the CA ballot wants to 'cap Dialysis clinics profit at 15%', supposedly to cut patient costs.
    Well, not really:
    "Saying they are concerned about safety in California's dialysis clinics, a coalition of nurses, technicians, patients and union representatives is backing legislation that would require more staffing and oversight.
    The bill, introduced by Sen. Ricardo Lara, D-Bell Gardens, would establish minimum staffing ratios, mandate a longer transition time between appointments and require annual inspections of the state's 562 licensed dialysis clinics."
    https://www.salon.com/2017/06/10/
    california-bill-addresses-safety-

    So, no, it has nothing to do with lowering costs, and you can ignore any claim of 'patient' support; this is a baksheesh grab and nothing else. It has to do with hiring more union workers to pad the union director's pay.
    And, since no one in the CA legislature has any idea how profit is calculated, you can imagine the actual reporting costs. If it passes, expect a raft of clinic closures, and very long lines at the ER at your fave hospital.
    Fucking lefty ignoramuses...

  • Sevo||

    And then:
    Salesforce tower ('highest west of the missus miller river!') is visible from my abode, The top six (?) stories is devoted to a 'light show'.
    Let us examine the hypocrisy:
    1) It is purely an expression of corporate hubris; it serves nothing other.
    2) I am sure it is lit by 'low consumption' lighting tech, but if I can see it 3 miles off, it really ain't so "low", so that hubris is eating energy that I'm sure Benioff claims to oppose.
    3) Benioff runs a 'cloud' (it ain't on your computer) company; this is web-conscious! The message tonight scrolling around the top implores people to:
    "GO TO A VOTING SITE TOMORROW AND VOTE D!", I'm sure.
    There will be women in sensible shoes at those sites, paper ballots, and those who wander in or those who can be "helped" (can't find it, but the image in the Chron this morning had two women 'helping' a 'homeless' voter in marking his ballot) I'm sure will vote 'correctly'.
    4) Search Salesforce Government; you will find that a good bit of Salesforce apps are aimed at collecting gov't grants or bizz in general:
    https://www.salesforce.com/solutions/
    industries/government/overview/
    Benioff is at least a crony as is Musk; slimy.

  • gaoxiaen||

    Bring back the AM links, for the love of God (or disbelief, whatever).

  • gaoxiaen||

    The business of business isn't just about creating profits for shareholders—it's also about improving the state of the world and driving stakeholder value." That's the same thing, except for government mddling.

  • gaoxiaen||

    *meddling

  • tlapp||

    Benioff is free to donate his money and/or have his company support any charity he chooses. He only wishes to force others to fund his beliefs.

  • vek||

    I've thought for awhile that MAYBE governments in the US (city, state, whatever) should just band together and offer to build a "Bum Town" in some middle of nowhere place. Like a whole city filled with shitty houses, liquor stores, etc. Maybe in a nowhere spot in Arizona desert, or in South Dakota... Wherever.

    Then pay whatever state does it a shit ton of money to police all the bums, not letting them out of the city to pollute other areas, and letting them do whatevs in city limits. Then every city in the country could just give hobos a ticket to that town, pay their blood money to the state that houses it, and be done with it.

    The bums could just get drunk, smoke crack, whatever, and be supported in full... But at least we wouldn't have to deal with them anymore! I imagine letting it be a free for all in the city would result in a lot of them dying too, which is a plus.

    Seems like it couldn't cost more than lots of cities already spend per head honestly... If it were a cheap spot real estate wise, and the houses were super tiny and shitty that wouldn't cost much. You could probably kick them down only $10-20K a year, and if it was doled out right they should get by on that. If they burn down too many houses, they could always stay in tents! They love that anyway.

    Don't see how it could be worse than the status quo...

  • Ben1234||

    Seems like giving money, food, housing, etc., to homeless people will just attract more homeless people.

  • vek||

    Oh, and it does! Seattle has shown exactly how to get thousands of homeless junkies to move to your city in a matter of only a few years!

    If more cities follow in our footsteps, I imagine they might go back to being more evenly spread out again, instead of all coming here, to SF, etc. So I suppose I should hope more lefty cities I don't live in follow suit...

  • Siegzon||

    You get more of what you subsidize. Isn't this how it got started? How about instead of throwing money at the problem, come up with new solutions, like teaming up with private institutions to open mental wards (for the politicians).

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