THE POLITICIZER

A fresh perspective on politics and society from the internet generation.

In Defense of Business: Corporations Create Jobs, Employ Americans and Keep This Country Moving

Posted by politicizer on June 16, 2009

Conor Rogers & Kathleen McCaffrey

In the wake of the financial crisis, corporations have gotten an even worse reputation than previously held. Pundits and politicians from both parties slam ambiguous “corporations” and “CEOs” for ruining America. Let me point out what none of these spectators have – it is thanks to the same CEOs and businesses that America became so successful in the first place. Any critic has committed one of two fallacies when they express this opinion:

One option is that this person actually believes that all corporations are bad and that CEOs are a bad influence – which would be a ridiculous and uneducated opinion. The other, and the more likely of the options, is that they realize that a large number of Americans are currently unfoundedly directing their anger at corporate America and are merely pandering to their collective rage. It is only a handful of corporate policies and legislative mistakes that have led to this crisis, yet the fair-weather politician begins to talk about what the voter thinks is true, rather than what actually is.

So what is the truth that many politicians are ignoring? Corporations create jobs, employ millions of Americans, give them opportunity to move up through promotion and merit-based qualification, and in the end, provide nearly every American with opportunity. Frankly, CEO’s guide the corporations that, in turn, create jobs. Statistics and job reports repeatedly show that the supermajority of jobs in the US are created through corporate, private enterprise – by small businesses and national corporations alike. No one has ever been hired by a poor man; jobs are born out of corporate wealth. Dismiss the literary merits of Ayn Rand if you will, but one of her indispensable messages in ‘Atlas Shrugged’ revealed the trickle-down system of power and wealth in this country. In a capitalist society, we are privy to corporate decisions that aim to please the consumer and are always trying to make some sort of progress in the name of profit. With the widespread government expansion that the Obama Administration is bringing forth, this concept of innovation will be lost with the decimation of profit incentive that government control brings to industries. Why would GM need to make a better product when the state will make sure they stay afloat either way? Reforming standards for mortgages and raising the down payments yuppies will make on their McMansions? That’s a job for people who will have to face consequences! Not the bailed out Fannie Mac and Freddie Mae! (Though it should be noted that government interference via “housing acts” made that particular mess in the first place. Not everyone can afford a great house – get over it.)

Government bureaucrats with nothing to lose are simply just not going to do as good of a job as an investor or broker with his or her job on the line. Without motivation, there is no performance, and when Washington, DC bureaucrats-for-life step in, there is no motivation for performance.  Yes, of course, some businesses fail and some businesses take down many people when this happens. However, the government’s alternative of trying to put the companies with failed business models and a record of malfunction, in the same league as companies with ingenuity will always be a recipe for failure at a cost to the consumer, the tax payer and the worker.

When Corporate America comes to mind, titles like ‘The Man in the Grey Flannel Suit’ and ‘Revolutionary Road’ do so as well. In a world so focused on the negative, it’s easy to dismiss corporate America as being such a faceless evil, stunting creativity and manufacturing the banal. More improvements in education, industrial manufacturing, marketing, and technology have come to fruition within the past sixty years than any other epoch in American history. This cannot be a coincidence – and it certainly was not facilitated by government intervention and planning. Thanks to corporations, opportunity was abound and advances driven by innovation have changed the face of our nation. Now, at the first sign of a crack in the armor of capitalism, some are calling for it to be thrown away. Corporations face punitive taxes, and at the sign of collapse, government ownership.

The father of modern Chinese literature, Lu Xun, wrote that we are all puppets to somebody else. Throughout Obama’s campaign, he tried to show that he was one with the common people and that his interests were in line with theirs. Four months into his administration we see that he believes Americans would like to have their hands in the pockets of the banking and auto industries with healthcare to come soon. While he may have felt like an appendage of the common man’s interest at first, leading to his popularity, Americans are waking up to find little difference from the CEO of GM and the CEO of America. The expansion of the government means a heavier influence on industry. The American consumer should be free to choose under a myriad of corporations trying to outdo one another than being shafted by only one state-sanctioned option. The corporation has to bear in mind the needs of the consumer and its competition, while the State merely works to stretch its dollars further. The corporation must win over the favoritism of the American consumer to be successful and prosper, while the American government only needs to write the consumer’s compliance into law. Corporate competition, not government, is the facilitator of the American dream and the gatekeeper of innovation.

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4 Responses to “In Defense of Business: Corporations Create Jobs, Employ Americans and Keep This Country Moving”

  1. Ian Goldin said

    You’re right, government does not drive innovation or create the American dream. But neither does corporate competition.

    In fact, big corporations mostly tend to put small business out of business.

    Cooperation, not competition, is the only thing that will save us. Business, government, and society needs to work together to share ideas and stimulate innovation. Japan became such a large hi-tech exporter because Japanese companies worked together to share information, earning this collection of business the nickname “Japan, Inc.”

    The Japanese auto industry is still booming. It’s too bad I can’t say the same about GM and the American auto industry.

    • politicizer said

      Ian, corporate competition most definitely drives innovation. The best thing the Government can do as a “partner” is to get out of the way (for the most part) and let the consumers drive the market.

      A few examples of how corporate competition propels innovation:

      *Verizon vs. AT&T produced the fastest mobile network capability we’ve ever seen
      *Apple vs. Microsoft has produced everything from videochat to the ipod
      *Laptops were born out of IBM trying to capitalize on the business market
      *Boeing vs Airbus has produced the fastest, safest and most advanced airplanes we’ve ever seen
      *Competition among television and internet providers has led to more information at our fingertips than we ever thought possible – faster than we ever imagined

      The Japanese auto industry is booming because their government allows their workers to be paid next-to-nothing, and then sell cars in the US for $30,000…something I know you’re certainly not fond of. GM et al tanked because it had a bulky business model and the average worker compensation of 70$ an hour. GM was not able to compete with Toyota and Hyundai simply because the two Japanese companies have a leaner business model with higher profit margins.

      While corporations have put some small businesses out of work (Pizza Hut vs. Johnny’s Pizza, Starbucks vs. Main Street Coffee) the rise of corporate America has actually facilitated a small business boom – selling what corporate America makes. This is why 88% of incorporated businesses in the US are currently small businesses (accounting for nearly 20% of the jobs)

      This post was meant to be a defense against the ludicrous line “Big corporate greed” and “High-flying CEO” lines we keep hearing thrown around on the news.

  2. Sandra Dunn said

    I believe your theory is quite right, but only have one comment. NO ONE is worth the amount of Bonus money the “big-wigs” were getting….NO One. I am also against this in pro sports ,movie actor, etc…..The amount these people are paid is totally ridiculous and should someway be CAPPED, if you will, for lack of a better term. The middle class is taking the brunt of these hard economic times , as I am one of them and feeling the pain!!!!!Thank you for listening.

  3. Michele Walk said

    I have to agree with Sandra that the bonuses received by the executives is just ridiculous. If they had put all of that money towards tax cuts (say 10% for those making under $300,000), small/new business loans, and increased higher education loans and grants, our economy would be much healthier. For instead of putting a “band-aid” on failing businesses, we would be encouraging building the great minds and businesses of tomorrow. Those very same taxpayers who are getting laid off and feeling the crunch would have direct aid to make their lives and the economy better.

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