I cannot recall a time absent the received wisdom that the public sector is superior to the private, or that the work of nonprofit organizations is higher than that of private industry. Since I was seven, I have been exhorted to cast aside the temptation of selfishness and work “for the public good,” because such work is on a morally higher plane.
Jefferson would beg to differ. He understood that the individual farmer or craftsman, and his family—who worked and defended their land, their forge, or their mill, and the right to their labor, their profit, and their property—were, not least in being the object of the state’s aim to foster the general welfare, the bulwark of society and free republican government. He did not share with those who now wrongly expropriate him a contempt for what they would call the bourgeoisie. “The small landowners,” he wrote to Madison, “are the most precious part of the state.”109 Jefferson understood as a result of experience, observation, study, and wisdom that when they worked for themselves they were cumulatively serving the greater good with more potency, efficiency, and justice than that of any other agency or from any other motive.
Actions must be judged by their effect, by the motivation of the actor, and by the conditions in which they occur. The order of importance assigned to these criteria changes with the circumstances. For instance, conditions become critically important when comparing a Sunday spent picking up litter in the park, with the saving of one’s patrol by throwing oneself on a hand grenade. In comparing in this country and in this time what people do for the most part, the prime consideration must be effect, with conditions next, and motivation a distant third, especially since motivation is so often misrepresented, self-serving, and ultimately irrelevant.
What is the difference then, in effect, between surgeons who operate in nonprofit or in for-profit hospitals? If the tumor is removed or the hernia repaired, the patient will be able to note the difference only in the bill. If he is charged less in the nonprofit hospital, it is because he or someone else is paying indirectly. Taxpayers must pay more to make up for the nonprofit’s tax exemption and privilege of receiving deductible contributions. They pay for the direct government grants to the hospital. They offset the lesser amounts paid by those who contribute and receive a deduction. And, while footing the bill for services provided to the tax-exempt nonprofit hospital, they also carry its share of taxes that would have been devoted to more general local expenditures. The nonprofit is accorded these privileges and enjoys a special position because it produces benefits such as curing pneumonia.
The for-profit hospital also cures pneumonia, but is not afforded similar status because it may be profitable, which is seen as somehow less than admirable and puts it in a different category literally and legally. How does it dispose of its profits? It returns them to the shareholders who funded it, just as the nonprofit hospital returns money (theoretically, and certainly not consistently) in the form of lower prices, to the community that funded it through tax privileges and direct grants. As in the case of the for-profit hospital, as the day follows the night, everything is paid for and someone pays for it, just as the internet did not fall from the internet tree but was paid for by taxpayer dollars apportioned to the military research that the progressive warriors of the internet might fashionably reject as unnecessary, immoral, and distasteful. The benefits and returns are highly variable, complex, and hard to predict, and they are never distributed evenly and seldom equitably. And yet of the two hospitals, one is held higher in public esteem for its supposed purity. If the indigent are treated in both, as is usually the case and usually by law; if in both the charges are more or less the same for the nonindigent; and if in both the quality of care is more or less the same, what is the purpose of the distinction? Should the answer be that the nonprofit treats more of the poor, that is because in a multiplicity of ways, as explained above, it is compensated for doing so. What, then, elevates it to a higher moral plane?
Consider a hypothetical lawyer with the hypothetical “Charlottesville Housing Alliance,” a nonprofit public service organization. On Tuesday last, he secured for his pro bono client access to an apartment from which she was wrongfully excluded because of her race, national origin, religion, or—more likely—because she was a Hollywood screenwriter. Without the lawyer’s representation, she would not have been able to exercise her legitimate rights. In righting this wrong, he has served the public generally and his client specifically. Of this he is proud and for this, and because it is “nonprofit,” his organization is accorded the special privilege of being tax-exempt: federal, state, and local. As TIAA-CREF might say in its ads, he is working for the greater good.
But what of the contractor who actually built the apartment? Without his work and risk of capital and labor, the client would have no apartment and the public in general would have less expectation of a reasonably priced housing market. To say that he serves the greater good less than the lawyer is logically unsupportable. He is not afforded the same recognition and privileges because he works for profit. What is his profit? The difference between revenues and expenses (including taxes, fees, and officially extorted proffers); that is, what he takes home is profit. What does the lawyer take home? The difference between revenues (from contributions, grants, possibly even fees) and expenses (not including, of course, taxes and proffers). What then is the difference? The contractor can potentially make large amounts of money, whereas the lawyer mythologically cannot. In fact, nonprofit compensation is often on a level with that elsewhere, but on the other hand the lawyer has not risked capital and his employer is insulated
