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Jewish World Review / August 24, 1998 / 2 Elul, 5758

Walter Williams

The pretense of superiority

PEOPLE TESTIFYING BEFORE CONGRESS frequently introduce themselves, "I am Mr. So and So, president of XYZ, a non-profit organization." Or, a news reporter might say, "RST, a non-profit organization, conducted a study that concludes that so and so is hazardous to good health."

When people utter the words non-profit, they say it as if that alone translates into decency, objectivity and selflessness. After all, we're supposed to think, they're in it for the good of society and not for those "evil" profits.

Human nature is not altered simply because of the type business in which we work. What changes are the restraints that govern our behavior. When entrepreneurs are motivated by profits, they usually capture most of their income or satisfaction in a money form. When entrepreneurs are not motivated by profits, or can't keep their profits, they seek to capture their satisfaction in other ways.

Evidence shows that non-profit organizations tend to enjoy amenities in non-money forms, like shorter working hours, lower employee standards, and more luxurious furniture and equipment than workers doing comparable work in the for-profit sector. The reasons are simple. If a for-profit entrepreneur squandered lots of money on non-necessities, he would have fewer money profits and a swarm of stockholders breathing down his neck. But entrepreneurs in the non-profit sector have no such fears because squandering money doesn't translate into fewer profits.

There is a more unattractive side to non-profit organizations such as colleges, hospitals, churches, the Postal Service and -- the granddaddy of all non-profits -- the government. Sex and race discrimination in employment is inefficient. When will people discriminate more? If you said, "When it doesn't cost as much," go to the head of the class. Sacrifices in productivity are far less costly in the non-profit sector than in the for-profit sector.

Historically, blacks have faced far greater discrimination in non-profits such as colleges and government. In 1936, only three black Ph.D.s were employed by the white universities in the United States, whereas 300 black chemists were employed in private industry. In 1930, there were few blacks in the Navy, while there were large numbers during the Civil War and even during the War of 1812. Prior to World War II, it was common for hospitals not to hire black and Jewish doctors. Most philanthropic organizations refused to hire blacks.

Universities also discriminated against admitting blacks. But where did blacks first break those discriminatory barriers? It was in sports. Why? Because sports is the big money-making part of the university, and just as in professional sports, the huge pool of black athletic talent couldn't be profitably ignored forever.

You might say: "Williams, your theory about non-profits is wrong. Government is at the forefront of hiring blacks; universities discriminate against whites to admit blacks!" I say cool it, and pay attention."

Earlier, I said non-profits can more easily sacrifice efficiency and indulge racial preferences and still stay in business because they don't have the discipline of profits. That means when it's politically popular to discriminate against blacks, non-profits will be at the forefront. And when it's politically popular to discriminate in favor of blacks, non-profits also will be at the forefront. It's two sides of the same coin.

When we hear the words non-profit, we shouldn't rush to assume saintliness. More importantly, the motivation that provides most of what we enjoy is profits. The motivation behind the delivery of what gives us the most grief is "serving the public interest," "for the good of the people" and other selfless claims. Education, the Postal Service and government services are good examples.