A Bold New World View, Part 7- How Business Works

Read Part 1 here.

Read Part 2 here.

Read Part 3 here.

Read Part 4 here.

Read Part 5 here.

Read Part 6 here.

Benevolence isn’t in the vocabulary of a success corporation. Corporations only exist to make money- nothing more and nothing less. If you start a company, and want your values to underlie the operation, keep it profit- that’s totally your right. Even in a private company, you’re going to run the operation efficiently enough to make money, but you can make decisions to match your values at least.

Corporations have a job to do- increase the value of their shares on the stock market, turning a profit for shareholders. Whatever the market conditions allow them to do legally to do so, they should do. Many of their shareholders are almost invisible in the process, being held in pension and retirement funds, by silent partners, and by other non-individuals. With such detachment from the process, these entities only care about the stock prices and dividends getting bigger.

Corporations, and really any business, are going to run with this in mind. If a grocery store needs five check-out lanes open at 9pm on a Friday night, guess how many lanes will be open? Yes, policy can have an influence, but not to the extent we pretend. A tax cut might allow a cash-strapped company (to be read as failing) to hire people that they wanted to, but couldn’t afford. It also might give a company the money to invest in research and development, when they didn’t before. To be clear though, banks are primarily responsible for loans that help companies do these things. We should not, on the whole, cut taxes in an effort to get rich people and companies to hire- that will only work when their primary issue is having enough money to hire. More often, the chief concern of a company is increasing the size of the dividend for shareholders, or increasing stock prices- to all be read profits. If the chief priority is usually profits, a tax cut will usually go into increasing profits.

Democrats will usually get angry that companies behave this way, and call them greedy. Republicans will defend them, and tell us to trust corporations and the rich, because they’ll do the right thing in the end. Both are missing the point. This emotions are not things corporations have. It’s not part of how they run.

The obvious answer to corporate misdeeds and worse is simple- government. You write a tax code that encourages good behavior- environmentally friendly actions, accepting unions, manufacturing here, honest behavior, living wages, pensions, and health care- as opposed to now, where often times the tax code encourages the bad behavior we oppose. You regulate corporations to make sure they don’t do truly harmful things to our public. Finally, you prosecute fraud and actual crimes. This is the government jobs. Most companies will do as much as we allow them, as much as makes them money without any risk. We should actually hope they do too. Any of us who have a retirement fund of any kind are relying on corporations to make us as much money as possible to live off of in our old age. We should just also hope that our government does it’s job too, and makes sure they play by the rules.

3 thoughts on “A Bold New World View, Part 7- How Business Works

  1. Pingback: A Bold, New World View, Part 8- Combatting the Pro-Growth Economy’s Misery | Rags to Rich’s

  2. Pingback: A Bold, New World View, Part 9- Of Class and Identity | Rags to Rich’s

  3. Pingback: A Bold, New World View, Part 11- Regionalism Still Matters | Rags to Rich’s

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