Let me re-post a recent quotation of the day from Don Boudreaux of Cafe Hayek.
from page 184 of Thomas Sowell’s 1995 book, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy (original emphasis):
The call for more “public service” is then a call for more people to work in jobs not representing the preferences of the public, as revealed through the marketplace, but the preferences of third parties enforced through government and paid for by the power of taxation. Sometimes work for foundations and other nonprofit organizations is also included in “public service.” What is crucial is that public service not be service defined by the public itself through its choices of how to spend its own money in market transactions, but defined for them by third-party elites.
For my recent birthday, my daughters wrote me a song in which they included my line about wishing that one of them would work for a profit. If there is one notion that K-12 teachers and college professors drill into students’ heads, it is that non-profit is good and profit is bad. When I teach about the difference between profits and non-profits, I say that the main difference is that for-profit organizations are responsive to customers while non-profit organizations are responsive to donors.
Maybe educators should teach about “neoclassical” concepts of (actual) market failures that perhaps can be appropriately addressed by non-profits, if there are such things.
My 1st grader told me smoking is bad because it is bad for the environment. I think schools, like the media, just have to fill A LOT of time.
I love it when I hear one of my students imply that working for a non-profit after they graduate is somehow more noble and other-serving than working for a for-profit firm. I just ask them what they think of the tuition they pay to the non-profit university they currently attend. Somehow they become a little less enamored by that non-profit status.
One thing about non-profits is that you can easily do a relatively short ‘tour of duty’ in one of them, be part of a larger ‘noble’ mission, and demonstrate ideological commitments to people who will be evaluating your resume later on. Also, your peer group is selective, since you are working for wages and in conditions and with cognitive requirements that are usually incompatible in the private marketplace. Non-profits are not as interested in building up your expertise and productivity. Profits don’t want to go to all the trouble only to lose you early in the process, and they are not very interested in hiring bright, entry-level people if they know ahead of time they will probably only stick around a year or two.
So, for example, I knew a fellow who worked in the Peace Corps for a year before applying to law school, and of course the admissions committee ate it up and thought it was great. The person who had actually worked as a cop or paralegal or engineer (trying to become a patent attorney) were just ho-hum.
That’s true. The signalling value of employment, paid or unpaid, with a not for profit organization, is no small part of the appeal.
“When I teach about the difference between profits and non-profits, I say that the main difference is that for-profit organizations are responsive to customers while non-profit organizations are responsive to donors.”
This is very true. Is it any wonder then that the high-minded (conservatives and progressives) believe in non-profit as the nobler of the two? In their view, customers are selfish, shallow creatures beholden to their base desires. Donors are sacrificing, wise elites who struggle to make the world the better place only they can conceive of much less bring about.
The terms, “for profit” and “non-profit” (or “not for profit”) are tax designations only in the U.S.
So you may also want to remind your children that “for profit” businesses pay taxes, while the “non-profit” firms evade taxes.