The Radical Center
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The Radical Center

The Profits of Generosity

A friend was driving from Italy to Germany and called, I suspect to stay awake given the time it was there. He asked what I thought about the economics of Christmas. I took that to mean the economics of gift-giving in general. Of course, there is also the entertainment of a winter holiday, but I focused on the economics of gifting.

When most people talk about economics they are talking about finances, dollars, pounds, pesos, profits or losses, and similar things. But I remember a dinner conversation I had with Dr. Milton Friedman, the Nobel Laureate in economics.

He and Rose had joined me at a larger dinner I organized for a few hundred people where he was the after-dinner speaker. He just finished his main speech and some announcements were being made before he took questions from the audience.

One announcement was about parking vouchers, which reduced the price of parking at the hotel where the dinner was held. He leans over and says, “Make sure I get one of those.”

A photo taken the night of the conversation in question. I’m on the left and Dr. Friedman is on the right.

I told him not to worry, we’d be paying his parking. After all, he spoke at my request as a favour, and wasn’t receiving his usual substantial honorarium. He continued to insist I shouldn’t worry about it and said, “I’m happy to pay for my parking, I just don’t want to pay full price,” rather typical for a world-respected economist.

I handed him a voucher and said, “Dr. Friedman, this has to be one of the smallest honorariums you have ever received.”

He said something I’ve never forgotten: “A good economist will tell you there is more to profit or reward than just financial gain.” He meant he gained emotional profits making worth while for him to put aside an honorarium in order to spend the evening with a group of people who shared similar values.

In many people’s minds the philosopher/novelist Ayn Rand wrote only about profits and “greed.” Yet, one of her main characters, Howard Roark, who often spoke for Rand herself, said of his architectural work, “I don’t build in order to have clients, I have clients in order to build!” His point was his work mattered more to him than payment— something exemplified when we saw him still working when his payment was minimal at best.

Rand did the same thing, though many people never knew it. She would speak every year at the Ford Hall Forum in Boston. The moderator for the Forum told the audience how the “greedy” Rand was one speaker who never used her fame to demand huge sums and mentioned to her that an audience member wanted to know if this was a contradiction to her own values. She replied: “You assume that the only possible values one can derived from any activity are financial, therefore anyone who wants to be a speaker does so only for a very high fee. Well, you know, that is placing your self-interest terribly low and terribly cheap.”

When Friedman’s “good economist” speaks of profit, like Rand, he means more than financial gains. The whole purpose of human action is to make our existence better than it has been. We don’t act to intentionally make ourselves worse off. Improvement is the goal which means more than just financial reward. When we give gifts we do it out of appreciation to people

I once put these words in the mouth of a character in a fictional story I wrote: “Love is totally and rightfully selfish. I love the joy on their faces when they receive a gift from me. Because I love them, seeing them happy makes me happy. Giving, when properly done, is very selfish. It ought to make you as happy, if not more so, than the person you give to.”

Rand once wrote of her joy at Christmas: “The charming aspect of Christmas is the fact that it expresses good will in a cheerful, happy, benevolent, non-sacrificial way. One says: ‘Merry Christmas’ — not ‘Weep and Repent.’ And the good will is expressed in a material, earthly form — by giving presents to one’s friends, or by sending them cards in token of remembrance . . . .”

Think of the many times you’ve witnessed gift-giving or generosity—even when the giving in going in one direction. How many times have you noticed the giver with as big a grin of happiness as the receiver?

On the one hand, the large producers and shops that produce the many items we give as gifts have to cover costs and pay their workers. But, it is a very different kind of profit involved for the gift-giver. It is the pleasure and joy of bringing a smile to the face of people for whom we care.

We all profit in a world where kindness, caring, and benevolence exist, and any “good economist” would agree. These are all aspects of an ethics based on rational self-interest. We benefit living in that sort of world.

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