Nonprofits & For-Profits: Working towards liberty with Justin Callais

Michelle Bernier: 

I'm very happy to have you here and for the audience that is already here in the room watching the webinar, I just want to quickly introduce you to Sinka Yeh, she's an assistant professor of economics at the University of Louisiana at Lafayette and Research, Economic Development and Income Mobility. He's the chief economist at Archbridge Institute, a multidisciplinary academic and policy research organization.

Justin received his Ph.D. from Texas Tech University with a Ph.D. in Applied Economics and received his bachelor's degree in economics from Loyola University in New Orleans. He's involved in the venture capital space as well, both as a principal and consultant. In this work, he has been involved in various ventures, including real estate development in New Orleans, digital media companies, automated trading platforms, battery productions and recreational travel booking.

So I think when we talk about creating this webinar and talking about how both non-profits and for-profit can advance and working together towards liberty, I couldn't think of a better person to actually run this show. So, Justin, I will let the space to you. You can start and I will be here if you need any assistance or anything else.

Justin Callais:

Thank you, everyone, for coming. And Michelle, thank you and Alex and the whole team for setting this up. I'm very excited about this, about this talk and this discussion with everybody. Yeah, like Michelle said, Justin Callais, I wear a few different hats and work in a few different spaces. So I'm going to talk a little bit about working with the non-profit and for-profit space. Talk a little bit about how liberty is a vehicle or how we can use liberty and how liberty is provided as a vehicle for allowing both of these often thought about separate industries, working, working together and sort of advancing liberty minded causes.

So I'll give a little bit of brief background just to kind of give kind of give a little bit of motivation about the if you look at different historical figures that talked about liberty business and non-profit, when you think back to one of the founders of the founder of economics, Adam Smith, talked about how individuals act in their own self-interest. But this doesn't mean that they are, that they are selfish, right? Just because we act in our own self-interest doesn't mean that we are sole individuals who are just acting in pure selfishness. Voluntary exchanges between businesses and consumers generate wealth on both sides and encourage innovation and they help solve issues and they help meet the demands of society.

And this is especially important when we kind of combine what Adam Smith said in The Wealth of Nations into the theory of moral sentiment where he talked about, you know, just like for-profits, non-profits also operate on voluntary cooperation and charitable activity, helping to address societal needs that might not be directly profitable, but still essential for providing sort of avenues of need throughout communities. And again, they both, they both kind of, well, again, they're thought about as separate. They really, they really kind of go hand in hand.

They both, you know, both for-profits and non-profits rely on individual preferences, individual actions. They rely on entrepreneurs who see those visions and see sort of the way in which one of the different things people are looking for and kind of how they want to address those problems. And they need that vision and that entrepreneurial spirit in order to thrive.

As Adam Smith indirectly discusses our inclination to be sympathetic, what one might call our charitable impulses, right? We have different impulses for different things, whether it's to start a business, to help out a non-profit, to start a non-profit itself. And the same is true for John Locke. We talk about the theory of natural rights, including life, liberty, and property, and that humans have a right to form associations based on their own free will.

And this directly relates to both for-profit and non-profit. They're both voluntary collectives where individuals exercise their freedom, whether to pursue social goals in non-profit space or economic goals and economic gain for profit. They're both manifestations of this exact same principle where individuals unite and they collaborate and innovate to fulfill the needs that the state does not and often can't fulfill. And it's all part of a broader kind of civil society. We are not rogue individuals. We exist within a broader society.

And that combination of basically that life, liberty, property with existing within a civil society plays an important role here. The idea here is that individuals organize themselves both through commerce and charity to meet needs and protect each other's rights. If he was here today, he would imagine he would view non-profits as a key part of the civil society, which allows people to address social concerns and social issues more freely.

And that idea of voluntary association is central and key to a well-functioning society that emphasizes freedom of choice, individual autonomy and limited government interference. Both non-profits and for-profits are going to embody this voluntary association in very different ways. For-profits, voluntary association in just business and commerce means that people can freely enter into those contracts and they can create business and they can trade goods and services. And similarly, on the customer side, they can choose to engage in that or not. They can choose whether or not to support a certain business, whether that's because of the products or what they stand for or for a variety of reasons.

We all just like businesses themselves have the right and the freedom to explore different opportunities, provide different goods and services. Individuals can do the same thing. And that's exactly how sort of the markets of supply and demand meet each other. No one's forced to participate. That's one of the key parts of this. And this is how it shows that it's valuable.

The fact that you're not forced to use a certain product, but you go out of your way to purchase it or supply it in the first place. If you're an entrepreneur, consumers can just buy the product that they want. Businesses compete to provide the best services, whether that's at the lowest cost, the best innovation, the best quality, the best customer service.

Right. There's a variety of different areas in which one can specialize in and try to attract customers. But again, the same thing is going to be exactly true for nonprofits.

Nonprofits are simply just also voluntary associations of individuals, and they come together to address social needs or advance certain causes that they see oppressing or needed. Right. And again, the nonprofits are most innovative and receive the best support or is going to receive the best support.

They're innovative and they provide causes that people in society deem to be important. Well, they're going to be the ones that you receive donations from. They're going to be the ones that go about actually going through the process of solving those.

And then people, you know, whether you're not a for profit owner or runner or someone who runs a nonprofit, people can still voluntarily donate their time, money and effort to those types of organizations without the need of coercion from the state. And what's important about both private business and nonprofits is that they perform tasks individually that governments can't do. Government organizations lack the knowledge and incentives to allocate those resources efficiently without some sort of profit motive or some sort of motive that.

All of them to act in in a way in which that leads to positive or societal benefits. Whenever we see central planning, whether that's in providing certain products or providing certain types of welfare, it's going to result in bureaucratic waste and inefficiency as government officials cannot account for the dispersed localized knowledge and millions of people have in the marketplace. There's no charity czar, there's no welfare czar that exists out there.

Right. That knowledge and the needs are possessed all across society. And when we essentially kind of focus too much or make it a point of just making sure that these or that these acts are performed by government organizations, they're not as reliable and they're not as.

Transparent's not the right word, but they're not as easily able to kind of respond to the needs of consumers, right? If there's a charity that starts spending money on things that they're not saying they're spending money on, there's a way in which you can decide to not support them, right? You can stop sending money, you can stop supporting them, you can stop volunteering, volunteering with them. If that same sort of excessive waste or inefficiencies are existing at government level, you can't just say like, oh, well, I don't think the Social Security Department is run very well, so I'm just going to stop paying my Social Security taxes, right? That's not exactly how that works. And it kind of all goes back to Hayek's knowledge problem.

The economy is so dynamic and this is, you know, people say that these sort of factors are less important because now we have technological advancements that make us more efficient in solving all these different problems. I would argue the opposite. I'd argue these sorts of issues are even more important now and even more relevant today because the economy is becoming more dynamic and more ever-changing and innovating at a more rapid rate than it did before.

Individuals acting in their own self-interest or their own needs can respond quickly to changing circumstances. For example, entrepreneurs and for-profit businesses can innovate and adapt to market needs much faster than government agencies can. And it kind of, taking a step back, it kind of thinks about the crowding out effect of what happens when you have government organizations that are trying too hard to, you know, get in the way of these activities, where they're trying to be overly or too supportive.

They find often what happens is that they're doing more harm than good. When governments expand its role in areas like welfare, education or health care, it can crowd out innovations in the private sector that can stifle the innovation that arises from competition and voluntary cooperation in both the for-profit and non-profit sectors. So the for-profits, right, when the government imposes heavy regulations or excessive taxes, it limits the ability for businesses to invest, grow or even start to begin with, right? If you have these sort of incentive structures where regulations are very stringent and tax rates are too high, you're essentially cutting out would-be entrepreneurs who would have entered the market.

So it's hurting the pre-existing actors in this space, but it's also stopping the unseen. It's stopping the people who would have joined in the first place. Similarly for non-profits, right, government interventions can also undermine charitable organizations.

For example, the expansion of government welfare programs can reduce people's incentive to donate to charity. If you assume that the state is taking care of it, I'm already paying a lot of taxes. The state's already kind of taking this, taking this role already.

So that's going to reduce the variety of solutions available and going to reduce the incentive to innovate in those solutions, right? And if that sector is not supported because it's being crowded out by government organizations, you're not going to see as much innovation. You're not going to see as much problem solving in the very specific areas. And what I like to say is that for-profits and non-profits are superior welfare providers.

Innovation makes us better off. Innovation allows us to access goods and combine different resources to create goods and services that we didn't think exist or we never would have thought of before, right? I'm sure a lot of people in this room have a lot of really great ideas, right? And for every great idea you have, there's hundreds of ideas out there that none of us even thought of or even thought about being possible. That's through the beauty of innovation.

And that is welfare enhancing, right? That's not making us worse off, but despite what people in the growth movement might think, it's making us better off because we can better, you know, we have more options of where to choose where we want to eat or what sort of products we want in our homes. And you have that option to kind of go around the marketplace and see kind of what fulfills your needs. And the same is going to be true for non-profits.

Non-profits are better welfare providers or superior welfare providers because they have the institutional structure in place that can be more nimble and provide more localized innovation, right? They can provide more localized problem solving, right? If you have kind of a one once one shop that just kind of is providing all these social services, and that's, you know, it's kind of cookie cutter and it's the same around the entire country. We're not responding to the needs of each individual society. That's where local foundations and local non-profits can actually go in and perform those tasks.

You can accomplish societal improvement in the market. And it's going to be true for non-profits and for profits. So think tanks, for example, are dedicated to researching and advocating for policy solutions.

Many of these organizations, especially some of the ones that I work with, promote free market ideas and the idea that we can solve these issues if you just let us. The research, you know, many of them research regulatory burdens and push for the need for reform, right? They're innovating in the way in which they're approaching policy, right? If you are, you know, if you have a think tank or you are a part of a think tank, you're just kind of pushing the same ideas year over year, but not moving, not getting anywhere. Well, that means you need to adapt and change, right? People have found sort of these innovative ways in which they can actually make those policy proposals that.

Lead us to a more market oriented society, you need to be innovative in how they actually approach that and be innovative and the audience that you're selling to in one state might not be the same you need to sell to the other state. So you need to adjust and adapt. And we're now at the point to where there are a lot of think tanks out there and they're now focused on specific policy objectives or specific ideas.

And again, we're going to see this innovation. For example, the Institute for Justice or the Pacific Legal Foundation, they hired teams of lawyers to fight against excessive overreach. We've seen sort of a lot of studies or a lot of the stories out there of these think tanks and organizations really make paving the way for finding creative ways to fight against excessive occupational licensing, for example.

I know that both these organizations have had a lot of in the home state that I live in, Louisiana, I've made a lot of ways in which they're kind of pushing back a lot against a lot of the occupational licensing stories through a legal lens. So there's different lenses in which you can try to make these policies exist. You can do it through research and outreach and education and advocacy or you do the legal sense.

All these things are doing a lot of different things, all with the same sort of common cause. And you can conduct research and policy proposals to shape policy. So you see this at ALEC or the American Legislation of Economic Council.

What they do is that they have model legislation that is discussed and voted on and and kind of shape. And what they do is that they have these model proposals and they give those to state legislators to then try to adapt and move into their state. So really providing innovative ways and ways in which to actually get policy moving in the direction.

For example, and some of the work I'm doing that I'll talk about a little bit with the Archbridge Institute. Is that we started working on a social mobility report of the state of social mobility across the state. And now as the report has come out, we are going through the process, reaching out to different states and different local think tanks to try to get those using the findings in that report and why certain states are doing better than others in certain margins to push forward on different policy proposals.

Every state is, some states are doing really well on certain indicators and some states are doing really poorly on certain indicators. So it's really about me feeling that need to innovate and find new ways. Right.

So, for example, had some discussions with a think tank in Illinois. And one of the things we noticed right is that, well, Illinois has excessively high tax rates. However, that's not something that is really going to get the ball moving.

Right. You can just say, oh, Illinois, we need to cut taxes in order to bring in new businesses. And while that is true, it's not going to have the same kind of effect as it would maybe in other states.

You need to find the specific, you know, kind of using the localized knowledge in that area with the research that we've done to come out with some sort of good combination of things that actually might get the ball moving. Similarly, for profit entities that make great strides in societal impact. Innovation creates new products.

They find new ways to make products better and cheaper. And they increase productivity. The beautiful thing about markets is that entrepreneurs move faster than government policies, which leads to both opportunities and challenges.

The opportunity is that they can exist before the regulatory environment has catched up, showing that these ventures and these ideas can exist without these news of regulation. Right. So they take study of it.

We do something before government policy can even catch up to it. If they were so innovative and as moving with this proposal, well, then these ventures can exist without. It's kind of showing that, hey, these ventures and these businesses can exist without that regulation because we did for a year or two before you were able to actually come in and make legislation about it.

That also provides challenges because once they catch up, these regulations often stifle new incumbents, which makes further innovation and entry more difficult. So it has kind of a double edged sword here that it has great opportunities and it shows great examples of. Business is solving problems without government intervention, but at the same time, that then means once the once the government policy has actually caught up to it a few years later, well, now.

Recycling competition in the future. Oftentimes for profit success can lead to nonprofit success, right? You see a ton of family foundations out there that were started by people who have had great success in business. And with a little bit of time I have left, I'll briefly talk about the two specific places that I'm doing the most work at, which one is the Archibald Institute and kind of the founding there is was started maybe six or seven years ago by Gonzalo Schwartz.

And kind of his or at least my interpretation of his thinking is that we pretty much let progressive ideologies have the monopoly in the in the space of caring about the poor and discussing mobility and inequality to kind of let them take the lead on those on those ideas. We think the market solutions can solve those even better than a lot of the solutions that are pushed by some of the more progressive ideology. We focus on the American dream, increasing opportunities for social mobility and human flourishing is a defining challenge of our time, in our opinion.

We really want to try to point out the fact we kind of show through reports and surveys and policy proposals that the American dream can still be alive and well if we follow certain protocols. And it's a multidisciplinary group. We have experts in economics and experts in psychology.

In this vein, I am the chief economist there as well, so I'm not going to go into And here's some of the work that we've done. So we have a few great researchers, researchers associated with Denise Center at West Virginia University that come out with the state occupational licensing index and look at every single occupation that you can get data on and see what states require licenses and don't require licenses and barriers to getting those licenses in those different states. On the report I already talked about a little bit, the social mobility in 50 states was a report that Gonzalo and I worked on where we assessed kind of a well-rounded approach to social mobility and what states are doing, making great strides in that area and which states are falling behind.

On the bottom right hand corner, we talk about the American dream snapshot, which is survey data that shows basically each year, I believe over the last three or four years as to how people see the American dream and how close people think they are to realizing it. And one interesting finding from that is basically that people are still excited about the American dream. People still see, despite what a lot of the kind of talking points have been, people still see America as a place that can have prosperity or people can rise and basically make their own life and what they see as best.

And perhaps most interesting from that is people, what they see as their kind of American dream for the most part in our survey is not just, oh, I want to be able to have a good job, right, because we're kind of in a situation where we're in a country that is relatively rich compared to most of the world. So we really care is all about well-rounded opportunities, finding that balance between economic success and family success and friend success and social success. Finally, on the top right, we've recently looked at state solutions to empower upward mobility, and that's where a bunch of different researchers came together and proposed specific solutions that states can take and learn from other states in order to push mobility forward.

And then I'm also the economic advisor for Cali Capital Management and we work with early stage VC with a focus on innovative companies in the Gulf South and just kind of give an update. We're working on a follow on fund for successful existing companies, the companies that we've already invested in in the past that we're looking for. They're looking to kind of reinvest in the ones that specifically have been doing well.

And I gave a few examples here, but we can talk about them over questions. If need be. And just kind of showing the sort of performance so far and how this is the second fund that we've done and the success that we've had so far and how we really want to push these companies that are kind of right on the precipice of taking off to the next stage.

So with that, thank you, everyone, for your time. Thank you, Michelle and Alex and the entire team for allowing me to come discuss this. And I'm happy to answer any questions.

Michelle Bernier: 

Yes, of course, you have one in the chat, actually, from Adrian Early. He says, have you seen for profit or non-profit entities seek to replace huge portions of government service portfolios? I believe so. I think we've seen a lot of, for example, I think one of my favorite examples of this is people in government for forever have been talking about we need to reduce the cost of medicine, right? The cost of health care and medicine is too expensive in this country.

Justin Callais: 

Well, I'm blanking on the name, but if you look at Mark Cuban's newest medical or medicine company, their idea is basically, hey, we we take medicine that's already been invented. We're not trying to reinvent the wheel here. We want to provide affordable medicine to people.

And I think that's one great example of how innovative entrepreneurs have taken the sort of issues that governments have been talking about for forever. And actually making it possible and actually doing something about it rather than just arguing about it for years upon years or putting policies that are going to make it worse. Thank you so much, Justin.

Alexander McCobin:

I'm going to open chat and the Q&A box to everyone else who want to ask any other question. But in the meantime, I do want to ask you one question, and it's about the main challenges that both sectors might face when it comes to seeking funding for pro-liberty initiatives, because I see that for non-profits, they all need to raise money, donations to get to do their job and to achieve the goal that they were created for. But then in BC, in the venture capital industry, it kind of happens the same.

I don't know if it's the same intention that you have with your fund, but for example, liberty ventures, we we want to find and support values aligned funders and we want to connect them with pro-liberty investors who are looking to advance freedom in the world. And that's something hard for us because the pipeline of options that we can, you know, that the pipeline of options of people that we can ask to be part of this is sadly limited. So what what's kind of the challenges and maybe some some kind of advice in general that you can give to both sectors when they are raising money for liberty? Yes, that's a great point.

Justin Callais: 

Well, now that you mention it, Liberty Ventures is also a great example of this sort of innovation, right? There are these value aligned entrepreneurs and value aligned investors who before had no way of actually knowing about each other rather than actually going out and finding these people individually. I think Liberty Ventures is one of the best example or I mean, the premier example of doing exactly this. I would say when it comes to advice, I think it's really the fundraising aspect is not my forte, since everyone would take my advice with a grain of salt.

So I would say that for fundraising, I think it's really about kind of the idea, right? People invest in the idea and the person. So I think if you're, you know, when it comes to actually thinking about fundraising, right, they probably even at least anecdotally from what I've seen is they invest in the person more than they invest in the idea. If you have good people and you have people who are great advocates for those ideas and those beliefs.

I think in that case, people have been able to make great success. And I'm not saying that just because he's my boss, but Gonzalo, I think this is a great example of this who, you know, he worked at the Atlas Network for a while and was working in their grant funding and then basically all of a sudden was able to, you know, started his own nonprofit and because he had that sort of expertise and had that sort of relationships and the sort of framework of how exactly to raise money. I think people really believed in his idea, really believed in what he was doing.
And I think that was what led to the success that ArchBridge has had. And when it comes down to fundraising for private sector sphere, I would say definitely it's all about the people. Right.

If you trust the people, I think trust is one of probably the main factors is that you trust the person you're investing your money with. That's going to go a long way. Right.

If from the get go, you're already a little concerned about the person, maybe you can get past the potential roadblock of of the actual idea itself, what the actual business is going towards. I think first and foremost, there needs to be people who are pitching the idea and people who you can trust. And again, I think that's one of the best things about having a sort of liberty ventures network where people who already have this implicit trust within each other because we're all kind of values aligned in that sense.

We're all kind of going towards the same common goals. I think I would say that's probably the best advice I can give there. Excellent.

Michelle Bernier:

I love that. I love that because actually that's right. People is a reason why we are into businesses, nonprofits, why we do everything that we do.
And that's also one of the reasons how that we connected with you, like two people like. So for example. Yes, of course.

So there is one more question here from Elisa. She's asking, what are some ways you have seen this free association process toward social mobility close gaps when race, gender and disability intersect with socioeconomic situations? 

Justin Callais: 

Yeah, no, that's a great question. I think it's probably one of the more pressing issues that we have right now is that people don't believe that the American dream is still alive and that that's a hard selling point.

Right. So we're kind of thinking we have to get out of the telephone, which is now we believe it is still alive and the survey backs it up. And I would say there's been a lot of good work both done by friends of mine or people who I'm least familiar with have shown, for example, with disabilities that this friend, Nicholas Reinhart, who has this great paper on the American Disabilities Act and shows that it was.

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