By Randall Smith

But first a note, Don't miss Robert Royal's lecture on St. John Henry Newman this evening about Conscience, live at Thomas More College in Nashua, New Hampshire or online by registering here.

Now for Professor Smith's column...

The term "philanthropist" is usually applied to CEOs who retire from their corporate jobs or business owners who sell their businesses so they can engage in "philanthropy," understood as "giving money to good causes."

I have no wish to be critical of such people. Yes, some may be engaged in philanthropy to look good with the "in" crowd. But I prefer to think the best of people. And obviously, people can do what they want with their money. So, I am always grateful when money they could have spent on a yacht or penthouses in New York and Paris goes instead to provide more financial aid for my students or better educational resources for my university.

What I am concerned about is how often business leaders are applauded only when they sell their business or leave their corporate jobs to devote themselves full-time to various philanthropic causes. It's as though "being in business" is something seedy and ignoble, but selling your company so you can spend your time and money ensuring women in Africa have birth control is virtuous and high-minded. But that is probably not the best example.

I am not as supportive of some "causes" as others, but (a) it's not up to me, and (b) there are also very good and important causes that wealthy people fund. And for those, we should be grateful. So please understand, for our present purposes, the issue is not "good" causes versus "bad," or causes I do or don't agree with. The issue is the underlying assumption that people need to quit their businesses to "do good."

People rarely seem to ask what happens to the employees when an owner sells his company to a hedge fund or when a company goes from private ownership to one publicly traded on the stock market. Contrary to the reputation the media portrays of "greedy owners" who want ever more money, when companies go public and sell stock to people around the country, the demand for profits skyrockets.

An owner may treat his employees as more important than profit. He or she may make taking care of the employees one of his or her main goals. "They make this company." "They've been with me since the beginning." Not all business owners act this way, but I have known many who did. Most did alright for themselves, but they did a lot for those around them as well.

That disposition is harder to maintain in a publicly traded company. The stock market can be a cruel mistress that makes big demands. When a CEO lays off 5000 employees, he is often doing so because he does not want the stock price to take a hit. He has a fiduciary duty to the owners, and the owners are the stockholders.

Yes, his compensation is often pegged to increases in the stock price, but the representatives of the stockholders on the board arranged it that way precisely so he or she would have the incentive to "make the tough choices" to keep the stock price going ever upward. It is rare, if not impossible, for owners of stocks or mutual funds to say, "this is enough; don't worry about making more profit."

But make no mistake. This means that we, whoever we are who own that stock, or a mutual fund invested in that stock (perhaps not even knowing it), have constantly demanded that the stock price go up or we sell. So who is responsible for laying off 5000 workers? We are. We have little patience if the stock is not going up and up. "But I'm taking care of my workers. People have been sick. Mary's mother is in the hospital." All this goes out the window.

We, who are insulated from such issues, take no account of them.

So let's consider again that owner who sells his company to do "good things." What happens to the employees left behind? They are often worse off, no longer treated the way he or she would have treated them. Now the profit motive is ...