Tuesday, August 5, 2014

Inconsistency and the "Hobby Lobby" thing

Much ink has already been spilled over the recent Supreme Court ruling that Hobby Lobby (and another company, as well as other “closely-held” companies) are exempt from the regulations of the Affordable Care Act with regard to what sort of insurance coverage is required for their employees. There are a lot of interesting takes on the matter, including these that I recommend—which demonstrate the complexity of the topic:

Why the Hobby Lobby case makes our job as Christians even harder

Even If Hobby Lobby Wins, We Lose

Why the Hobby Lobby Decision Actually Hurts People of Faith

I’m not interested in discussing whether or not this was a good decision by the Supreme Court or a “victory” for Christians; that’s been done enough already. I’m also uninterested in debating the inconsistencies of whether Hobby Lobby is hypocritical for offering 401(k) plans that invest financially in companies that make birth control pills which are abortifacients. That, too, has been talked about enough.

What I want to look at are two (other) specific ways in which this decision represents inconsistency that Christians should be aware of.

Inconsistency #1: whither liability?

For folks concerned with ethics (in a formal way—everyone is concerned with ethics informally, whether they know it or not), a reasonable question of the last couple of generations is concerned with liability and ownership regarding for-profit companies. 

A bit of history: prior to the 90s, in most cases a privately-held, for-profit company meant that the owners held some degree of liability for the actions of that company (or corporation). The concept of a “limit of liability” was around, but there were stipulations as to which kinds of companies qualified. Further, the very concept of a limit of liability is essentially a product of the era of industrialization; the first modern law allowing a limit of liability for a company was passed in New York in 1811—a long time ago by U.S. history standards, but not so long in the grand scheme of western history.*

Mostly, it was the big corporations that got to limit their liability until the 90s, when the idea of an “LLC” became widespread. Anyone who remembers the Bailey Building and Loan Association from the movie It’s a Wonderful Life will recognize how this was so (spoiler alert): George Bailey was personally “on the hook” for the lost money at the end, even though it was technically his business’s money (and an employee of the business that lost it).

For the last handful of decades (if not for centuries), businesses have been striving to sever the liability of the business from the liability of its owners—precisely because of examples like the fictional George Bailey—and many, many real-life counterparts. And, for the most part, they have succeeded: it is now possible to have businesses that lose money from the very beginning, and never become profitable, but those in charge are not liable. What was different with someone like Bernie Madoff wasn’t that he was liable for the practices of his investment business (Madoff Investment Securities, LLC—a “limited-liability corporation”) in ways that others aren’t, but that his investment business was fraudulent in its practices.

Jump forward to the Hobby Lobby issue before the Supreme Court. One of the fundamental claims in this case was that Hobby Lobby, as a “closely-held private company," is itself a “Christian business” because its owners are Christians. In other words, the company is claimed to assume a characteristic of its ownership by nature of that very ownership.

[To be clear: Hobby Lobby is NOT an “LLC” but is a standard C-Corporation, which also affords it a limit of liability similar to that of an LLC in some ways.]

This seems to blur the lines a bit. If there is a limit of liability, it seems most consistent that there should be a limit too of what aspects of the owner’s identity can be carried over to the corporation itself. I think it raises the question: are the owners of Hobby Lobby willing to forfeit their limit of liability in order to preserve this corporate identity of their company as a “Christian company”?

Let’s look at it in a very realistic counter-example: had the Supreme Court differed by a single vote, then Hobby Lobby (famously) would have been on the hook for a fine of $100 per employee per day in violation of the ACA; this would have amounted to a fine of $2.1 million per day! If the assets of the company had been unable to absorb that cost, were the owners prepared to pay that fine (or at least the balance of it) out of their own pockets? 

This appears to be a major step “backward” in the effort to divorce owners from the liability of their companies. And, ethically, perhaps that’s a very good thing—but it is certainly inconsistent with the trajectories and trends of the last couple of generations’ worth of business law in the United States.

Inconsistency #2: “don’t-ask-don’t-tell” round two

Maybe a bigger ethical question is related to how similar this issue is to the “Don’t Ask, Don’t Tell” policy of recent vintage. (I wrote about that issue a few years ago, including some thoughts regarding the inconsistencies of it, so I won’t cover the same ground very much here.) 

One of my problems with the “Don’t Ask, Don’t Tell” policy was this: it essentially said to homosexuals, “We don’t care whether or not you are a homosexual—or whether or not your homosexuality is sinful according to the Bible—as long as we don’t know about it.” This is not a biblical position, and it is not a pastoral one. Insofar as repealing that policy removed this apathy toward the sin or temptation to sin in others, I was (and am) for it.

The Hobby Lobby issue is very similar in this regard. In essence, the argument was, “We refuse to be forced to provide medical attention to women who work for us, if that medical attention includes something that we recognize as contrary to our ethical and theological convictions.” Fair enough, as far as it goes.

But I would say it doesn’t go far enough. Like “Don’t Ask, Don’t Tell,” this posture ignores the possibility that there may be women in their company that would otherwise accept such medical attention. What does Hobby Lobby offer to them? 

David Green, the founder, is on record saying, "We do everything we possibly can to be a help to our employees… that they can structure their lives based on biblical principles. It’s not something that’s forced on anybody, but it’s there for them if they would like” (Link). He has also said, "We're Christians, and we run our business on Christian principles. I've always said that the first two goals of our business are 1) to run our business in harmony with God's laws, and 2) to focus on people more than money” (Link). What he hasn’t said is how their focus on people, and how their Christian principles, have shaped the way they care for their employees.

Yes, they pay a decent wage. Do they also look after their employees when they are in financial distress? What happens when one of their 21,000 employees gets pregnant out of wedlock—do they offer support and help in those cases? Do they offer teaching, instruction, and counsel on why they believe abortion is wrong?

These are more than a company might ordinarily be expected to offer to employees. But Hobby Lobby has declared itself to be a “Christian company” that operates on Christian principles. This demands that they meet and exceed a much higher standard than an ordinary company does. If Hobby Lobby is a “Christian company” they should do these things—because these are the kinds of things that Christians should do.

Public lawsuits and giving a chunk of profits to Jerry Falwell are not the extent of what it would mean to operate according to Christian principles. If Hobby Lobby wants to be taken seriously as a “Christian company” they have a lot more work to do—or, at least, they need to be more open and forthright about things they may already be doing.



*For more on the history of limits of liability, see Limited Liability (in Wikipedia); Limited Liability Company (from Inc. magazine); and LLC History (from llc-reporter.com).