"BUSINESS ETHICS 101 IN THE AGE OF THE CORPORATE TAX CUT" - Sydney Catholic Business Network Lunch, Hyatt Regency Hotel, Sydney

Archbishop Anthony Fisher OP,
9 Mar 2018

"BUSINESS ETHICS 101 IN THE AGE OF THE CORPORATE TAX CUT"
Sydney Catholic Business Network Lunch, Hyatt Regency Hotel, Sydney

Thank you Lisa. Your Excellency, Archbishop Angelo Zani, Secretary of the Congregation for Catholic Education, my Lords Bishop Terry Brady, Richard Umbers, Monsignor Guy-Real Thivierge, ACU Pro-Chancellor Julien O'Connell and Vice-Chancellor Greg Craven, Mr Luke Foley MP Leader of the state Opposition, Mr Michael Digges Archdiocesan Business Manager, fellow clergy and religious, business leaders and friends all:

Introduction

Last year I spoke to this Business Network of the tendency in modernity for 'the Fourth Estate' - the media - increasingly to shape rather than simply report social and political attitudes, and of the even more recent tendency of the 'Fifth Estate' - corporate executives - to throw their corporate weight behind campaigns on social issues that have nothing to do with their business. I was challenged at the time to say more about the Catholic view of the proper role of business. So here goes…

Book III of the Catechism of the Catholic Church uses the Ten Commandments to frame discussion not just of traditional moral issues but also of the particular challenges we face today. The first three commandments show us how to love God above all else, and challenge us to cultivate the God-knowing and relating virtues of faith, hope and charity. This has some things to say about contemporary superstition, anti-religious feeling, and proper religious liberties.

The 'second tablet of the Decalogue' tells us how to love our neighbours as ourselves. Thus the Fourth Commandment - "honour thy father and thy mother" - focuses on the family and, by extension, that family of families that is society, and thus relationships between children and parents, the young and old, students and teachers, employees and employers, citizens and authorities. It invites reflection on rights and responsibilities in those contexts, and the development of virtues such as filial obedience, reverence for ancestors, elders and traditions, as well as nurture of the young and weak. It has implications for current issues like understandings of family, transmission of faith to the young, the quality of schools at one end of life and nursing homes at the other, the responsibilities of citizens to government and vice versa, and the duties of both towards outsiders including asylum-seekers.

The Fifth Commandment - "thou shalt not kill" - addresses reverence for body and soul, health and life. This means more than just not murdering anyone: it requires a struggle against violence and for peace, within our world, our communities and ourselves. It grounds a health and research ethic, and speaks to contemporary issues like terrorism, domestic violence, euthanasia laws, drug policy, child abuse, workplace health and safety, capital punishment and gun control - to name a few.

The Sixth Commandment - "thou shalt not commit adultery" - emphasises respect for human sexuality and marriage, and virtues such as self-mastery and chastity. In identifying distortions and misuses of our sexuality, it has things to say to present-day controversies such as social and legal understandings of marriage, gender ideologies, internet porn, not to mention ministerial codes of conduct.

The Eighth Commandment - "thou shalt not bear false witness" - focuses on respect for truth, and virtues such as honesty and candour. This has implications for contemporary issues such as twitter gossip and trolling, media ethics, and principles for research, publication and the arts.

The last two Commandments form a bridge between the commandments and the beatitudes: they propose attitudes to people and property that help us keep the commandments and reverence the goods they protect.

The Alberici storm

Doubtless you've followed the storm over articles recently published by ABC 'economist' Emma Alberici. They critiqued the Federal Government plan to cut corporate taxes from 30% to 25%, following the general global trend and especially the example of the U.S. Alberici argued (as others have) that many of our leading corporations have contrived to pay little or no tax for years and to hold staff wage increases below CPI, all the while paying large dividends to shareholders - often overseas - and even larger salaries and bonuses to executives; they were, in her view, undeserving of further advantages.

Her criticisms came under immediate fire: the Prime Minister called the articles "confused and poorly researched";1 Judith Sloan in The Australian accused her of totally misunderstanding how the company tax system works;2 while Nick Cater of the Menzies Research Centre said she'd joined the "the economic equivalent of the anti-vaccination movement".3 Alberici was forced to retract or moderate some of her claims.

Only fools and journos rush in where angels fear to tread. Though I may have done as much university economics as Alberici, I don't pretend any expertise, let alone any God-given magisterium in such matters. I'm in no position to assess the Government's arguments for a tax-cut as a fillip to the economy, investment and employment, or the Opposition's prediction of little or no trickle down to workers by way of new jobs or wage increases: those are matters for serious economists. But behind the Alberici storm were some fundamental questions that are, ultimately, moral-spiritual in nature: about the ultimate purpose of earthly goods and enterprises, how we are to conceive relationships in corporate life, the rights and responsibilities of various stakeholders, and implications for wider community.

Catholic Business Ethics

Which brings me to the Seventh Commandment (CCC 2401-2463), a stop the more attentive of you will have noticed I by-passed in my brief tour of Catholic ethics. "Thou shalt not steal" addresses respect for earthly goods, and virtues such as justice and charity between people. In many of his parables Jesus draws on examples from business life - in fishing, farming, manufacture, trading, building, investing, rent-taking, borrowing, paying and writing down debts, settling accounts and taxes.4 These agents should view themselves as collaborators in a common project rather than intractable rivals, and cooperate mutually and mercifully, attentive to each other's rights and needs, as well as their own. Indeed, the business parables suggest we should think of business life as a variety of friendship between owners, managers, staff, suppliers and customers: as they collaborate each makes some part of the other's good their own; as their connections develop so do their responsibilities to each other. Embracing this conception of business, we can start to apply Jesus' 'new accounting' which directs prodigal giving and forgiving, putting God before mammon, laying up treasure in heavenly banks, and serving Him in the needy.5

Pope Francis has repeatedly described business as "a noble vocation" - in his apostolic exhortation Evangelii gaudium,6 in his Message to the World Economic Forum in Davos,7 in his encyclical letter Laudato Si'8 and in his Address to the U.S. Congress.9 But business is only worthy of such a description if it reflects certain foundational orientations or principles:

  • the goal of all economic, political and social activity is serving "the dignity of the human person"
  • businesses contribute to this by enabling access to food, shelter, healthcare, education, leisure, culture, law, information, the environment and other goods (the conditions of human flourishing or "common good")
  • businesses provide jobs (labour, innovation, entrepreneurship) that are opportunities for fulfilment and service
  • businesses also generate wealth and income that provide further opportunities
  • businesses draw upon "the natural and human ecology" given to "the common stewardship of humanity"
  • businesses give and receive support in this from above and below, centralised and devolved, mutual and individual ("solidarity and subsidiarity").

The friendship and vocational view of business life means owners and managers will ensure their enterprises only engage in activities that genuinely contribute to the common good, and by socially responsible means. They will seek reasonable (and only a reasonable) company profits, executive rewards and shareholder dividends. They will pay just wages and taxes, charge reasonable prices, and never exploit their economic power to oppress people, pursue personal or social goals unrelated to the purposes of their enterprise, or to evade their corporate or legal responsibilities.

The friendship and vocational view of business life also means employers will treat their workers as associates in a common enterprise, provide reasonable work conditions, treat employees fairly and mercifully, and, importantly, pay a family wage (net of other social measures in place). Employees, on the other hand, will serve the interests of their firm, try hard to be productive, seek only just wages and conditions, and treat management and each other fairly and mercifully; striking, for instance, would only ever be a last resort for a just cause.

Where next?

In 1930, despite the Great Depression, the British economist John Maynard Keynes wrote optimistically about the Economic Possibilities for our Grandchildren.10 He predicted that continued improvements in productivity would yield by today an average work-day of three hours, work-week of 15 hours, and sufficient incomes to support greater leisure and security. Yet for all the productivity increases since Keynes' day - much greater than he imagined11 - the benefits have been very unevenly shared, most work at least as many hours as people did decades ago, most families now need two bread-winners to make ends meet, many are now priced out of the housing market, and wages have been stagnant for some years.12

Well, you might say, Keynes' story only shows how pointless it is to gaze three generations into the future. But was he wrong to want his grandchildren to share the benefits of rising productivity? If taxation or other economic reform comes, will it be on terms that assist such ordinary human aspirations to come to fruition, let alone the richer social and business ethic elaborated in the Catholic tradition? Will all the stakeholders - owners, executives, workers, suppliers, customers, taxpayers - reasonably benefit? I say 'reasonably', because justice does not require all benefits be equally shared: even in heaven some people get better seats than others! But under our presently reigning business 'ethic', corporate gains may be enjoyed by shareholders and executives but not necessarily by workers or customers.

Over the past four decades CEO salaries in the U.S. have increased nearly 1000%, shareholder rewards risen half as much, but the wages of typical workers seen only "painfully slow" growth at best.13 As the gap between the richest and poorest widened, the proportion in the middle shrank.14 Though the withering of 'middle Australia' has been less dramatic, only 1 in 5 lower income Australians now owns a home, compared to 3 in 5 four decades ago; and where our top 1% of earners used to take home 5% of the total income, they now take 10%.15 Even were these developments consistent with the ethic I've sketched today, declining numbers of middle-income earners will surely affect people's commitment to the success of our enterprises and economy, and affect our social harmony and polity.

Conclusion

In Papal Economics Maciej Zieba argues that, following Sts Thomas Aquinas and Antoninus of Florence, some popes such as Leo XIII, Pius XI and John Paul II eschewed idealized conceptions of economic relations and instead proposed solutions to identified problems; whereas others, more in the tradition of the Fathers and St Bernard, such as Popes Paul VI and Francis, have taken a "prophetic" approach, highlighting the plight of the disadvantaged and denouncing injustices, while leaving it to others to sort out the remedies.16

There is a time and place for each approach. But either way, we need more than optimism or pessimism, smugness or envy, when judging the moral-spiritual health of our businesses, or debating corporate taxes and salaries. Today I've offered some Catholic equipment for approaching such matters. St Peter Faber was the first Jesuit after St Ignatius. When working in Mainz, Germany, he was appalled by the poverty, especially of the 6,500 homeless people. "Having arisen in the quiet of the night to pray, I felt strongly inspired to do my very utmost to provide for the needy, sick and homeless wandering about the city of Mainz," he wrote. "Perhaps if we [Jesuits] had a flair for business we could do more about this problem." Well, I'm told over 500 people will sleep rough in our own CBD tonight, and that 28,000 are presently 'homeless' in our state. More than ever, we need people like yourselves, with a flair for business and an eye to the common good, to help us think these things through. God bless you all.

2 Judith Sloan, "Company Tax Cuts: let' have a debate based on facts", The Australian, 17 February 2018.

3 Nick Cater, "Emma Alberici and the ABC have lost authority", The Australian, 27 February 2018.

4 Mt 7:24-27; 13:1-9, 45-46; 17:24-27; 18:23-35; 20:1-16; 21:28-32-41; 22:15-22; 25:1-13; 14-30; Lk 5:1-11; 11:5-13; 16:1-15 etc.

5 Mt 5:38-42; 7:19-21, 24-34; 10:40-42; 19:16-30; 21:12-13; 25:31-46; Lk 6:20,37-38; 9:57-62; 10:1-9; 12:13-34; 15:11-32; 16:19-31; 18:18-30; 21:1-4 etc.

6 Pope Francis, Evangelii gaudium: Apostolic Exhortation on the Proclamation of the Gospel in Today's World (2013), 203.

7 Pope Francis, Message to the World Economic Forum, Davos-Klosters, 17 January 2014.

8 Pope Francis, Laudato Si': Encyclical on Care for Our Common Home (2015), 129.

9Pope Francis, Address to the Congress of the United States, 24 September 2015.See also Cardinal Peter Turkson, "What does it mean to say Business is a Vocation?" Living the Vocation to Business: Conference of the Catholic University of America Business and Economics School, Washington DC, 23-26 September 2014.

10 John Maynard Keynes, "Economic Possibilities for our Grandchildren" (1930), in Essays in Persuasion (New York: Norton, 1963), pp. 358-73.

14 Emily Badger and Christopher Ingraham, "The middle class is shrinking just about everywhere in America", Washington Post 11 May 2016; Nelson Schwartz, "Middle class contracted in U.S. over 2 decades, study finds", New York Times 24 April 2017.

15 "Australia's middle class shrinks as property creates great divide", Daily Telegraph 28 July 2016; Matt Liddy, Ben Spraggon and Nathan Hoad, "CEOs now earn 78 times more than Aussie workers", ABC News, 6 December 2017; Peter Whiteford, "The 'inequality wars': CEO pay is one part of complex picture post-GFC", ABC News, 7 December 2017; Julie Walker, "Australia should compare CEO and average worker pay like the US and UK", The Conversation, 26 January 2018; Jeff Borland & Michael Coelli, "Labour market inequality in Australia", Economic Record, 92(299) (Dec 2016), 517-47; Mike Pottenger & Andrew Leigh, "Long-run trends in Australian executive remuneration: BHP, 1887-2013", Australian Economic History Review, 56(1) (Mar 2016), 2-32.

16 Robert Whaples, "The economics of Pope Francis: An Introduction", The Independent Review 21(3) (Winter 2017), 325-45, citing Maciej Zieba, Papal Economics: The Catholic Church on Democratic Capitalism (Wilmington, Del: ISI Books, 2014), 196.