Bad Customer Service
Fifty years ago, if you ran a small store and you mistreated a customer, that customer would complain to his friends and you'd lose a significant amount of patronage. The customer was "always right" because positive word of mouth was essential to the success of most businesses.
But when you're a 21st century nationwide conglomerate, you'll often find that a more effective business strategy is to get the customers in and out as quickly as possible, with minimum effort from your paid labor. So when a dissatisfied customer disrupts the quick and steady flow of things, all you want to do is get him out of the way and make room for the majority of customers, the ones your product or service successfully satisfies.
Bad Employee Compensation
It's profitable to pay your low-skilled employees their market value of $6 an hour instead of a realistic living wage of $15. This news story talks about Wal-Mart as a textbook case. From the article:
Wal-Mart brags about how its low prices help poor Americans, but its low wages are helping increase the number of Americans in poverty.Bad Environmental Policy
If you're a corporation, it's profitable to screw over the environment. For example, think about the packaging a corporation decides to use for its products. The decision is made based on what is attractive to the customer, and what is low-cost. It doesn't affect the bottom line if the packaging isn't bio-degradable. It certainly affects the communities where landfills are built, but that is not the corporation's concern.
What's Good for America
Many people will agree with a statement like this one:
What's good for business is good for America.But now you can see why that's wrong. What's good for corporations is increasing their bottom line. The actions that cause corporations' bottom lines to increase may or may not be good for America. They might be good if:
Corporations increase their bottom lines by being more productive, and selling more goods for the same production costs. If the trend is that more goods become affordable to the average American, then it could be good for America by increasing the quality of life.
Corporations are able to increase their bottom line through a process that also requires the hiring of well-compensated employees. That way, something that's good for corporations will create more jobs.
It could be good for America by a coincidence. For example, a tax break for one business might enable them to expand, and in the process they tear down their old factory and build a better, modern one, and its newer technology emits fewer pollutants, ozone-depleting agents, and/or greenhouse gases.
Likewise, what's good for corporations could be bad for society if:
A tax break to a corporation lowers its costs and increases its profit margin. The board of directors votes to use this new profit to increase the CEO's salary, and buy a round of private jets for other executives. This doesn't help America at all. This kind of thing is actually a growing trend in the 21st-century economy, and it is creating an obscene concentration of wealth. You can say that it helps the companies that sell the jets, but that isn't necessarily good for America either.
A corporation might find a way to cut costs by using a new technology, such as a new type of robot. As a result, it will fire its workers by the thousand. This is also a huge trend that contributes to the increasing concentration of wealth, and the increasingly robotic nation.
It could be bad for America by a coincidence. For example, a corporation might use money from a tax break to lobby for deregulation of its industry, which is bad for American consumers. (The corporation might also use the money to lobby for more tax breaks.)
The Government's Role
The government's role should not be to simply promote whatever is good for business. The government's role in regulating business is to create policies that cause corporations' profit incentives to line up with positive social goals. For example:
The government can aggressively investigate incidents of treating customers unfairly, and fine guilty corporations. That way, customer service will be more linked to profit margins.
The government can raise the minimum wage. That way, companies that can afford to pay employees a living wage can no longer use part of that money to increase a few executives' already high salaries.
The government can make the air a finite commodity, like land, that belongs to the people. It can charge corporations for the privilege of dumping waste into the air, which can only hold so much pollution before it poisons us all to death. The government can also create a law that forces corporations to take responsibility for their products' end-cycle costs, and eliminate all landfills.
Corporations don't benefit society by making profit, they benefit society when they improve the average American's quality of life. But corporations are designed to only strive for the former, so it is the government's role to line it up with the latter.
2 comments:
Couple of things to consider.
First, people own corporations. Most big companies are public, and most public companies are owned by funds representing individual investors or individual investors directory. So making money is the right thing for companies to do, it puts money in the hands of the people, which goes back into the economy.
Second, big companies are essential consumers. They keep a lot of smaller companies in business, by buying parts, reselling products, consuming services, etc. A big part of a big company's revenue which isn't profit gets recycled as smaller companies' revenue.
Oh, and of course big companies employ a lot of people, and labor is generally the biggest expense for most companies. So that part goes to people, too.
Actually the only part of a big company's revenue which isn't efficiently reinvested in the economy is their taxes. Government doesn't efficiently plow tax revenue back into the economy. Which is why lowering corporate taxes is a good thing to do.
Hey Ole, these are good examples of how what's good for business is good for America. But I think that today we overestimate their importance, and we sacrifice too much for them. Specifically addressing your points:
1. Who actually buys stock in these publicly owned companies? I think it tends to be Americans who are already upper class. I don't think many of the bottom half of Americans invest in stock.
2. This is a good point to add to the list of benefits. But the problem is that when the government does something that's good for corporations, the tendency today is that the excess profit flows up into the executives' pockets, and doesn't get reinvested as often as it should. Plus, these large companies are going to be very shrewd when purchasing their supplies from smaller companies, and the winning bidder small company will have thin profit margins. So if tax breaks are going to go to corporations, they should be targeted toward the smaller ones in the first place.
3. When a company wants to expand using its extra money from a tax break, it is nowhere near as good for the job market today as it used to be. Technological solutions are undercutting low-wage workers more and more. Instead of giving Wal-Mart a tax cut to hire more employees at dismal wages, it's better to legislate that Wal-Mart pay its current employees living wages.
4. "Actually the only part of a big company's revenue which isn't efficiently reinvested in the economy is their taxes. Government doesn't efficiently plow tax revenue back into the economy."
Well, government isn't efficient in general. But plowing revenue into the economy is overrated, because the way the economy is set up today would have that revenue plowed up to the wealthiest 1% more than anyone else. But the goal is to improve the average American's quality of life. So the argument is actually circular logic -- you have to first assume that what's good for the economy is good for America.
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