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Imprimis, On Line -- June, 1993
Imprimis, meaning "in the first place," is a free
monthly publication of Hillsdale College (circulation
435,000 worldwide). Hillsdale College is a liberal arts
institution known for its defense of free market
principles and Western culture and its nearly 150-year
refusal to accept federal funds. Imprimis publishes
lectures by such well-known figures as Ronald Reagan,
Jeane Kirkpatrick, Tom Wolfe, Charlton Heston, and many
more. Permission to reprint is hereby granted, provided
credit is given to Hillsdale College. Copyright 1992.
For more information on free print subscriptions or
back issues, call 1-800-437-2268, or 1-517-439-1524,
ext. 2319.
---------------------------------------------
Making a Difference: Three Business Leaders Speak Out
---------------------------------------------
Volume 22, Number 6
Hillsdale College, Hillsdale, Michigan 49242
June 1993
---------------------------------------------
"Helping to Educate"
by Peter M. Flanigan
Director, Dillon, Read & Co.
About eight years ago I was commuting from a
comfortable office in midtown Manhattan to a
comfortable home in the suburbs and that took me,
daily, through Harlem and the South Bronx. Looking out
the window and seeing the deplorable conditions in
which children were being raised, I could not help but
feeling that we, and our democratic society, were
failing them. My wife and I talked about it and said,
"Well, what can we do?"
We had heard about Gene Lang, a New York
businessman who went back to his school in Harlem to
give a graduation speech before the sixth graders, who
were all black or Hispanic. His speech began, "Your
future is limitless, the skies are bright," but he knew
that this wasn't true. He tore up the rest of his
speech and said, "The only way you can experience your
dream is to graduate from high school and then from
college. The odds are you won't do that, but I'll tell
you what: If any of you graduate from high school and
can get into college, I will see to it that your
tuition is paid." This was the beginning of a marvelous
organization called the "I Have a Dream" Foundation.
My wife and I agreed to join Lang's efforts. That
spring, I spoke to a graduating class of 50 sixth
graders in the South Bronx and made them the same
promise: "You graduate from high school, and I'll see
that you can go to college." The class was excited--for
about two weeks, then interest waned. We hired a social
worker and arranged for tutoring. We worked for six
years with the 50 students that we "adopted." When the
class finished the 12th grade in June 1992, only seven
enrolled in college. Five or six more may decide to
enroll. Considering all the time and resources that we
dedicated to this project, getting only 12 or 13 out of
50 students into college seems a waste.
It isn't enough to want to do good. You have to
determine what it is that you can do and then you will
be successful. Why weren't we making a dent in these
kids' attitudes? Why weren't we able to improve their
grades? Why weren't we getting more of them to stay in
school? We couldn't change their home lives, we
couldn't change their neighborhoods, and we couldn't
even change their schools. If we could have changed
their schools we would have had a much greater chance
of succeeding.
There are two parallel school systems in New York
City. The public school system enrolls 960,000
students. It involves a huge bureaucracy, with some
5,000 administrators outside the schools themselves. As
of the early 1990s, it was costing $6,000 yearly to put
a student through grammar school and $7,600 to put him
through high school.
Now, the public system has some very good schools,
even a few of national renown. But most students must
go to what are known as "zoned schools." There is no
freedom to choose. A student must attend the zoned
school to which he is assigned. Despite the millions of
dollars that have been poured into them, zoned schools
have a notoriously poor record of performance. Only 25
percent of all students in zoned New York inner-city
schools graduate. According to the Rand Corporation,
four years after entering high school about 15 percent
take the SATs. Although these represent the best
students, their average score is 604 combined. (You can
score 400 just by signing your name twice.)
By contrast, the New York City private school
system has 145,000 students and only 35 outside
administrators. The average annual cost in recent years
has been about $1,900 in grammar school and $3,200 in
high school. The same Rand study says that of students
comparable to those in zoned inner-city public high
schools 70 percent take the SATS and have average
scores of 802. Clearly, if you can change the inner-
city students' schools you can change their lives.
If we are trying to save kids who need an
education and they are in a system that doesn't
educate, our efforts will fail, plain and simple. The
answer to this dilemma is equally simple: Let's take
students out of the schools that don't teach and put
them into the schools that do teach. Six years ago, we
decided to do just that. I approached the fellow in the
office next to mine and said, "If you could change a
student's odds of success from one in eight to seven in
eight, would you do it?" He said, "How?" I replied,
"Pay his private school tuition for four years and
spend some time with him." The response was, "Lead me
to him." We went down to the next office and made the
same pitch, and so on. There are now 637 sponsors for
637 students in New York City private schools. Seventy
percent graduate from private schools and virtually all
enroll in college.
Who are these 637 sponsors? They are mostly young,
fast-track attorneys or executives in the investment
and commercial banking community. In this sense, they
are like the protagonist in that wonderful satire,
Bonfire of the Vanities by Tom Wolfe. But unlike
Sherman McCoy, the "Master of the Universe" who had
infinite courage on the trading desk but was scared to
death to get off the freeway in the South Bronx, our
637 sponsors go into the South Bronx all the time. They
are the ones, contrary to all the media stereotypes
about "rich yuppies" and "greedy businessmen," who are
working hand in hand with schools to help hundreds of
inner-city students get an education.
The key to the success of this effort is that
everyone involved chooses to participate. For human
creativity to flourish, it must be unfettered. Free
individuals will do things that constrained individuals
will never do. In the schools that are most successful,
the principal chooses to be there and he chooses the
way in which the school is organized. He chooses the
teachers, and the teachers choose him. Together, they
choose a curriculum. And then students and parents
choose the school. Everybody buys into that single
educational enterprise.
But this is not how most of the schools in our
public system are organized. A principal, largely based
on his length of tenure, is appointed. He is given a
very strict set of guidelines of what and how to teach:
say, 22.5 hours of English, 17.5 hours of math, driving
instruction, sex education, hygiene, etc., and he may
not vary the schedule. Teachers are assigned from the
central pool. Even if they are incompetent, they are
paid the same as other teachers and largely are
protected from being fired or disciplined. Hordes of
outside administrators and hundreds of regulations
dictate what all teachers must and must not do in the
classroom-- they have almost no discretion. And then
students are assigned to schools, regardless of whether
they want to go. Finally, taxpayers are forced to pour
more and more assets and resources into the system in
the vain hope that more money will make it work.
American public education is organized exactly
like Soviet agriculture was organized. It is a
bureaucratic, top-heavy system with every decision
directed from above. In every other walk of life we
choose how we will spend our resources and where we
will go to purchase services. Only in the first 12
years of public education are we denied freedom of
choice.
That is why voluntarism and private philanthropy
are so vital in America. We need to ensure that more
students can choose their schools and more schools can
choose to succeed in their own way. There is no
shortage of individuals who are willing to make
financial contributions or to get out there and put
their shoulders to the wheel. Help them do it; show
them how they can get involved and they will join you
enthusiastically and support your effort. Stay away
from bureaucracy. Be patient; don't hurry and the
rewards will be extraordinary. When I get a little blue
or discouraged, I go to a little school at 110th Street
called St. Ann's. After spending time with the 300
inner-city minority students enrolled there, invariably
I come away excited and uplifted. Or I attend a high
school graduation and look at the face of a sponsor who
is there to see his "adopted" student graduate. He or
she is thinking, "That child is getting his diploma
because of what I've done. I made a difference." i
---------------------------------------------
"In Search of National Principles"
by Robert J. Mylod
Chairman, President and CEO,
Michigan National Corporation
and Michigan National Bank
When one ponders how major institutions in our society
such as government, education, business and culture
have evolved in the last 200 years, it seems clear that
they have negatively affected our national principles,
particularly the principles that govern how we respond
to contemporary social problems.
Look at government. The clear, inexorable drift of
the political process has been toward increasing
government intrusion. In 1982, when the Grace
Commission issued its landmark report on government
spending, the national debt stood at roughly $1
trillion. The Commission predicted that, without a
change in political will, the debt would grow to some
$4 trillion by 1992 and to $14 trillion by the year
2000. That forecast is chillingly accurate so far.
Today's national debt stands at over $4 trillion. Since
the early 1960s, annual outlays for "entitlements,"
i.e., mandatory government spending programs, have
grown from about $30 billion to about $700 billion. And
we have increasingly looked off shore to finance this
policy. Foreign sources now hold about 12 percent of
our national debt. If this trend continues, we run the
risk of losing control of our domestic policy, which
might not be such a bad idea, but is hardly an
impressive problem-solving technique.
What about the social impact of this massive
public investment on the nation's poor, the group it
was primarily designed to help? Statistics indicate
that poor Americans are actually better housed (38
percent own their own home), better fed, and own more
personal property (some 62 percent, for example, own
their own car) than average U.S. citizens throughout
most of this century. But a spiritual and cultural
impoverishment has emerged that outweighs the economic
progress we have achieved.
For example, 86 percent of poor families are
headed by adults who don't work full-time, suggesting a
pattern of dependency. Sixty percent, moreover, are
headed by single women, many of whom are encouraged by
unintended government financial incentives to dissolve
family unity. The illegitimate birthrate has soared 65
percent in our nation's capitol alone. Crime,
particularly violent crime driven by substance abuse,
has exploded and has disproportionately savaged poor
families. The national principles that undergird a
functional, productive life seem to be fast
disappearing, notwithstanding this flood of federal and
state assistance.
Education, like government, appears to have hurt
more than helped. It has not only failed to impart
basic academic skills (SAT scores have plummeted since
1965), but it seems to teach students that their "self
esteem" is more important than their skills, and that
situational ethics and moral relativism are required in
dealing with life's dilemmas.
It's no surprise that in a recent nationwide poll
of nearly 7,000 students, 61 percent of those in high
school and 31 percent of those in college admitted to
cheating on one or more exams. And, after completing
the written survey, about 35 percent of the students
also confessed that they did not answer all the
questions truthfully! Nor is it a surprise that
according to the National School Safety Center, nearly
three million violent crimes and thefts occur on school
campuses annually, 12 percent involving a weapon.
Substance abuse and sexual promiscuity have
skyrocketed. Since 1970, unwed pregnancies are up 87
percent among 18- and 19-year-olds.
How does business fit into this ethical equation?
The free enterprise system has produced the largest,
most powerful economic engine that the world has ever
known. It has consistently, although cyclically,
created increasing wealth and, in so doing, lifted the
standard of living for all the nation's citizens.
Success has been fashioned out of risk, capital,
innovation, energy, intelligence, and national
principles like hard work, responsibility, and simple
fairness.
But, unfortunately, not all businesses subscribe
to these principles. In the last year, two major
publicly-held corporations have been financially
decimated by disclosures that their senior managers
grossly overstated inventories. And the country is
still suffering from the near collapse of the savings
and loan industry, which will ultimately cost taxpayers
more than $100 billion.
How about the entertainment industry? Detroit News
writer George Cantor had an extraordinarily insightful
column recently on this topic. He was describing how
Barbra Streisand sang about children, parents and
values at the inauguration festivities for President
Clinton. Cantor wrote, "But it is a little unnerving
hearing this lesson being preached by a member of the
entertainment community. It would be hard to cite
another segment of American life that has been more
corrosive in values, more undermining of parental
authority, than show business. In its virtual non-stop
celebration of sex without love, violent behavior,
contempt for religion, hatred of country, adultery--the
industry stands alone as a source of concern for
parents who care about what their children listen to
and see."
He concluded by advising the show biz crowd to
clean up its own act before lecturing the rest of the
country: "Children will listen, children will see." He
was right. In an era when the incidence of sexually
transmitted disease, teenage pregnancy, violence,
greed, fraud, and countless other forms of self-
indulgence are rapidly growing, it is disappointing in
the extreme to watch them continuously and relentlessly
extolled by the entertainment industry.
What does the church have to say? The signals are
diverse, but an increasing chorus calls for the
redistribution of national wealth. Those with problems,
like the poor, are regarded as blameless victims who
must be cared for by government. They lack
responsibility for their actions, so there is no
question of guilt or accountability.
Less focus seems to be placed on living a virtuous
life. Church leaders are particularly important in
defining these principles. The great French observer of
the American scene, Alexis de Tocqueville, in summing
up America's strength once said, "I searched for
America's greatness in her matchless Constitution, and
it was not there. I searched for America's greatness in
her halls of Congress, and it was not there. I searched
for America's greatness in her rich and fertile fields
and teeming potential, and it was not there. It was not
until I went into the heartlands of America and into
her churches and met the American people that I
discovered what it is that makes America great. America
is great because America is good; and if America ever
ceases to be good, America will cease to be great."
The ultimate challenge is to recover our national
principles, as we continue to participate in our major
institutions. Each is subject in some way to our
influence--the government by voters, schools by
parents, business and entertainment by consumers, and
churches by their congregations. We should support and
encourage the fundamental goodness among our people
that is the linchpin of all institutions. In
particular, the more we promote voluntary action, the
more this goodness flourishes.
Here's a specific list of ways to start this
recovery, and, of course, it means starting with
ourselves:
∙ Each of us should write a script for our life. As we
do so, we should answer the question, "What purpose
will I pursue in my life?"
∙ Once the script is written, we should live it.
Aristotle said, "We are what we repeatedly do.
Excellence, then, is not an act, but a habit." The same
is doubly true for character. We should be a powerful
example for the people around us, for, as the Bible
says, "We are the light of the world."
∙ We should aggressively participate in articulating
the principles and agendas of the major institutions of
our country. Concepts like responsibility, integrity,
honesty, fairness, empathy, commitment, self-control,
love, and generosity should be embedded in these.
∙ We should seek leadership that embraces these
principles; we should abandon leadership that doesn't.
We should hold leaders to standards in their personal
lives as well as their public lives.
∙ As we move into our own leadership roles, we should
surround ourselves with those who share these
principles and encourage them to articulate and
"export" them.
---------------------------------------------
"The Meaning of Corporate Stewardship"
by Jeffrey H. Coors
President, ACX Technologies
Throughout history, most of the world has thought of
giving and self-sacrifice as a means of earning
something in return. But the Judeo- Christian tradition
views giving and self-sacrifice as a voluntary
reflection of God's benevolent nature in whose image we
were created. Giving of ourselves and our resources is
being what we were created to be.
Millions of Americans believe this to be true. We
are the most giving nation on earth. There is no
tradition of benevolence that can compare in Asia,
Latin America, Africa, or even Europe. Nowhere in the
world is there a United Way or a Cancer Society like
ours. No other nation supports missionaries to the same
extent, and none can compare with America in support
for private, independent education. In many countries,
congregations do not even pass the offering plate.
Mandatory church taxes pay for everything, from the
priest, the organist, the choir, and the ushers to the
heat, water, and electricity. They are the most
lifeless churches you have ever entered.
When everything is taken care of by government,
the spirit of voluntary commitment is lost. In
contrast, it is our Judeo-Christian heritage that has
inspired our giving. Americans donate about $100
billion to charity each year, mostly in the form of
individual contributions. Remarkably, poor Americans
give a higher percentage of their incomes than do their
more affluent neighbors. Corporate America currently
gives $5 billion, or five percent, of all charitable
giving each year. This is a relatively new source of
philanthropy, begun during World War I, when
corporations were urged to declare "Red Cross
Dividends." These were paid with after-tax dollars;
they were not considered legitimate business expenses
by the IRS. Nonetheless, many businesses went along.
During the Depression, other charities like Community
Chest and United Way adopted the idea. But not until
1936 did the IRS declare that a charitable contribution
could be a deductible business expense, and even then
it had to directly benefit the business. This ruling
actually allowed management to circumvent shareholders
in making the decision to contribute. Then in 1953 a
gift to Princeton University triggered a court battle
that led the IRS to allow gifts to any organization
without regard to the best interests of the business.
The only limit, which is still in effect today,
stipulated that gifts must be no more than five percent
of a corporation's pre-tax earnings. Very few
corporations give the maximum.
There are plenty of people who will tell you that
five percent is not enough. But we ought not ask
whether the corporate community "does its fair share."
We ought, rather, to ask: "What is corporate
responsibility?" This is a question that goes to the
nature of business itself. Very simply, a business
sells goods and/or services to people who want them. By
law, a business corporation is authorized to act in
place of a person, even though it may be owned by many.
The profits belong to all who invest in expectation of
earning a return, so shouldn't the profits of a
corporation be reserved for the benefit of the owners?
Of course, the owners have a duty and obligation
to consider how they will dispose of their profits. The
matter is simple in a proprietorship or partnership
with a small number of owners: The parties may meet and
choose to give to worthy causes. It gets more
complicated in the case of a so-called public company,
which may have thousands of shareholders. How can all
be consulted on disposition of the profits? I think the
solution is very simple: pay out the profits as
dividends and let the owners decide what to do with the
money.
But in recent years corporations have learned from
politicians to become very skilled at giving away other
people's money while making themselves feel good about
it. Many arguments are raised to justify corporate
giving. One of them is genuine altruism. People are
moved by pure motives to contribute, and that is
commendable. A second argument is that the needs are so
great that they require corporate rather than
individual resources. A third justification is that
giving creates goodwill in the community. This view is
based on the idea that it is important for corporations
to be good citizens and to contribute to the community.
(It sounds appealing until one realizes that it is
possible to give back to the community simply by
lowering prices.)
The current buzzword in corporate giving is
"enlightened self-interest." If you make the world a
better place, people will buy more of what you have to
sell. Enlightened self-interest also creates good
public relations. Whole textbooks have been written on
this kind of "cause-related marketing." Huge P.R.
departments create photo opportunities for corporate
heads to shake hands with the leaders of local
charities and to hand them checks. The results of this
kind of philanthropy are measured by the good it does
for the company, not the good it does for the
recipient.
There is also a great deal of peer pressure to
conform in the corporate world. If a worthy cause is in
need and most of the community is giving to that
organization, a company becomes conspicuous by its
absence. And corporate philanthropy can help avoid
trouble. Dozens of special interest groups routinely
target corporations and issue the threat of a boycott
in order to secure contributions. Often these
contributions are in reality just like "protection
money" businesses are forced to pay to the underworld.
Corporate philanthropy has also funded hundreds of
legitimate causes meant to solve our nation's problems.
But the poor seem to get poorer, the plight of the
inner city has grown, and many citizens have become
more and more dependent upon the federal government.
Corporate philanthropy has helped foster that
dependence. In the Capital Research Center's Patterns
of Corporate Philanthropy the philanthropic
contributions of the top 250 corporations in the
country are graded. Gifts to a conservative
organizations merit an "A." Contributions to a non-
ideological group are awarded a "C," while benefactions
to leftist/liberal causes earn a "D" or an "F." The
scores for each company are then averaged. Since the
book was first published in 1986, there has not been a
single top corporation with a record of giving that
deserved an "A" rating. Only 13 percent in the last
study had a "B"; 24 percent had a "C"; 52 percent had a
"D"; 11 percent had an "F." I question the motives and
values of companies that give shareholder profits to
organizations that encourage further dependency on
government. Is this "enlightened self-interest"?
It is also clear that corporate philanthropy has
been a poor substitute for personal philanthropy. It
has not only been widely perverted by businesses and
special interest groups, but it has not been very
effective in addressing the problems it seeks to solve.
In this context, it is more important than ever that we
develop guidelines for personal philanthropy.
Here are the guidelines I would suggest:
(1) Giving is an individual opportunity to reflect the
benevolent nature of a loving God. Give so that you
might become the person you were created to be.
(2) Support people and causes with which you are
personally involved. Give more than just money to those
you are helping; stand with them and help them
personally.
(3) The Bible says that the measure you use to give,
whether large or small, will be used to measure what is
given back to you. It is important to consider the
biblical tithe as an appropriate standard. It does not
have to be 10 percent, but it should be a specific
amount you set aside as soon as you receive your
paycheck.
(4) Do not wait until you are established in the world;
you will never be established in the world. You will
never reach a point at which you have "arrived" and can
begin giving.
(5) Give privately, not seeking recognition for your
work; it is for others' benefit, not your own, that you
are giving.
(6) Be a cheerful giver. The joy of helping others far
exceeds the joy of helping yourself.
---------------------------------------------
Peter M. Flanigan is a director of Dillon, Read & Co.,
a New York-based international investment banking firm.
A Navy carrier pilot, he joined the firm shortly after
his World War II duty, leaving temporarily to serve as
an economic analyst for the Economic Reconstruction
Administration in the United Kingdom, as a special
assistant to President Nixon and as director of his
Council of International Economic Policy. Currently, he
is a director of the Anheuser-Busch Companies, Inc.,
and the Budd Company and is a member of the advisory
board of Advanced Technology Ventures. He is also
founder of the Student/Sponsor Partnership and a board
or committee member of such organizations as the
Manhattan Institute, the Portmouth Abbey School, the
John M. Olin Foundation, the Richard M. Nixon Library,
and the National Parks Foundation.
---------------------------------------------
Robert J. Mylod is chairman, president and chief
executive officer of Michigan National Corporation and
Michigan National Bank. He joined the corporation in
1985, after serving for a number of years as the head
of the Federal National Mortgage Association in
Washington, D.C. and the Advance Mortgage Company in
Michigan, and as vice president of Citicorp in New
York. A Navy veteran, he is a director of VISA U.S.A.,
Inc., and a trustee of the Henry Ford Health System,
Detroit's Cornerstone Schools, and the Citizens
Research Council of Michigan. He also holds
directorships with the Detroit Symphony, the Economic
Club of Detroit, the United Way and Detroit
Renaissance. In addition, he is a member of the
executive committee for the United Negro College Fund
and an honorary member of National Volunteer Week.
---------------------------------------------
A Hillsdale College trustee since 1985 and a current
Hillsdale parent, Jeffrey H. Coors is president of ACX
Technologies, a publicly traded industrial products
manufacturing business in the fields of industrial
ceramics, paper packaging and aluminum container sheet.
As a chemical engineer with a strong interest in
technology, his career focused on developing these
businesses under the Adolph Coors Company prior to
their spin-off as ACX in 1992. His many civic
responsibilities include service on the boards of such
organizations as the Denver Museum of Natural History,
the Adolph Coors Foundation, the Colorado Leadership
Forum, the Free Congress Foundation, and the Colorado
Association of Commerce and Industry. He also chairs
Hillsdale College's FreedomQuest sesquicentennial
campaign.
###
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End of this issue of Imprimis, On Line; Information
about the electronic publisher, Applied Foresight,
Inc., is in the file, IMPR_BY.TXT
+++++++++++++++++++++++++++++++++++++++++++++++++++++++