This page deals with economics and business issues,concerning Latin America, and the global economy.-
Sunday, September 28, 2014
The non profit society:Chile at a crossroads
It is surprising to say the least, how come that the old justification approach to ethics ,is becoming these days the inner support for public policies in Chile .
Let begin with some explanations about "the justification" approach for ethics.It means that individuals , business , and any economic agents, should do what it seems right ; because that is what society expect as a common ground for its citizens living together .Thus,some key values like honesty,fairness,saving , become shared values by everyone as a source of interaction and exchanges.However, this approach consider society as a unity ,centralized and focused in those areas related to culture,self improvement,religion ,arts ,social engagement and economic activities based upon exchange .This was the case before modern times, when the whole society boundery were shaled by he Church and Kings.
Todays´s society is more dicentralized,diverse,dynamic ,focused in a variety of issues,with money facilitating transactions,and business as source of wealth.It is Functionally structured and it goes beyond social constraint.People become relevant not because of their social backgrounds, but because of their abilities and skills necessary to get productivity and competitiveness gains , or to do good actions for the benefit of others.
This change, means a different approach to ethics: the one called "the implementation". In this approach, ethics means to validate actions widely accepted by society, because of its positive effect on its welfare.For instance, Social responsibility,profits on business activities,transparency, accountability,wealth cretion, are the values which society care the most as the rules for individual and business behavior.It changes the focus from justification (the morality of what it is right), to implementation ( the morality of the way the facts are) .Thus, it moves from what it is expected, to what it is accepted.
So, following the explanation, let move to the the key issue.Can any society pretend to rule out profit as an incentive for productive activities?Or can any society to rule out the purpose of creating wealth?.In fact it can, but in the process society become somehow constraint by moral laws ,instead of institutions .
Is Chilean society and its economy, moving toward that direction?.Is there in the proposed reforms a new fundamentalims applied to economic and productive activities to replace markets laws and institutions ?.
The fact of the matter, is that the (legitimate) reforms proposed in Chile, rule out profits in education,and in private health,and apply higher taxes on business profits,(green taxes were postponed).
Although higher taxes justify its implementation, because of redistributive goals( lower inequality),it looks like profits has become a moral burden for the chilean politicians,(right and left) and important segment of chilean society as well.
However, if it is for moral concern, in Chile there are also other moral issues such as: 80% of child born out of legal marriage,abortion exist although there is not legal authorization for it,few people get the most of better opportunities, the State do not fit eficiency standard to complement markets for wealth creation,and people still have to wait at least two months for public health .
Profits are legitimate as long as it comes from legal activities, and as long as does not get a rent from consumers surplus like monopoly and oligopoly do.But in these cases, there are institutions to care about it, applying tough laws and imposing heavy fines. The same should apply in education and private health programs, whether it becomes the case that profits do not match quality and service expectations or any other indicators designed for evaluate the outcome of organizations realedt to those activities.The ratio quality(service)/ profit should be greater than one. But pretending that profits mean an inmorality, it looks like both chilean society and its economy are moving backward.
The right approach, should be to improve the quality of accountability and transparency, which requires stronger and better institutions and laws designed to measure quality and services standards,which are possible to get on the side of organizations only if there are incentives for it.
A society which self impose a penalty to wealth creation,It may become sooner or later, not more egalitarian but poorer.