Sunday, February 3, 2008

Corporations

A lot of people in this country look at corporations as evil, money-mongering institutions that must be kept in check by the government. The liberal press has a lot to do with that feeling. The problem is, corporations employ the same people who claim to hate them, and they do what the consumer demands - they find ways to cut costs to deliver a lower priced, higher quality product, or at least a product that has such a lower price that some lessening of quality is made up by the fact the product is just so cheap. Consumers rarely go to a store and intentionally pay more to encourage certain business practices. Most consumers go to the big box stores - the largest retailer and largest grocer in the world is Walmart for a reason - and buy the cheapest products that suit their needs.

Corporations, in other words, are not evil - they are entities run by people who respond to the market. They do things to remain competitive, and they do things to sustain their business, their employees (where possible), and their shareholders. When taxes get cut on corporations in America, jobs get created. It is a verifiable fact that the job market improves when corporate taxes are cut. If they were removed altogether, there would be a lot more jobs in this country. Corporations would stop shipping as much work overseas because it would be less expensive to produce things in the US. The tax structure has as much to do with companies shipping jobs overseas as anything else, though overregulation plays another key role.

Imagine for a moment, a business looking for a place to start up. The owners want to make a product for sale. Would they be smart to start that business in a location that charged high taxes, had workers that had to be paid more highly because of similarly high taxes on their payroll, and had stiff regulations on everything from hours someone can work to what sort of emissions their facility could release into the environment and many things in between? Or would it make more sense to locate in a place that had relatively low taxes, low costs of land and facilities, low regulations, and a work force willing to take a much lower wage? What individual would make the choice to locate in the first location? Why should a business do anything different than a reasonably intelligent person? Yet, any time an American-based corporation chooses to move its operations to a foreign country, they are villified for it. Why not villify those truly responsible for making the company choose to move - the government? Few products are made in America anymore, largely because regulations and taxes have made it so unreasonable to stay. Americans still buy the products of these companies, so the message is clear: Americans have voted with their dollars to approve the move. The Unites States Government does not regulate foreign products coming in nearly as severely as they regulate American-made products. Other countries often do quite the opposite. Japan, for instance, has much harsher regulations on foreign products than on Japanese products, and they charge higher taxes on foreign products. Their government supports their national economy in that way. Shouldn't our government do the same thing? Wouldn't such a shift have a wonderfully positive influence on the economy of the United States? Manufacturing jobs could return as products are built here. Costs of shipping those products would go down because they are made here instead of abroad. As costs go down, prices drop, and people can live on much less. With a program like the FairTax, though, people would actually have more of their wages to live on, which would in turn create more jobs as spending caused the economy to grow rapidly.

Deregulation and lower taxes would help the United States, its economy, and its citizens far more than increased regulation, higher taxes, and more government programs. I pray that some day the government, and those in the halls of power, will see those facts and do something to truly help America, instead of giving us back our own money and hoping we'll go spend it to put a bandaid on a badly broken economy.

-- Robert

4 comments:

Eric said...

Though I pretty much agree with your description of corporations, I think it's a little one-sided.

One of the failings (we're not perfect, of course) of our current economic environment is that corporations aren't much encouraged to think long-term.

If laying someone off now makes the management a little more money, they don't care if 10 years from now they have to pay more to hire someone because of the loss of trust. They've moved on to manage some other company. If a corporation wants to pollute a little or a lot, there's no immediate reason not to, other than legislated consequences.

I'm not saying corporations are evil. I plan to work for a corporation for a few more decades. When I retire, I hope to retire on money that's been invested in money-making corporations.

Robert said...

Yes, my point of view is one-sided in my arguments here. One reason I am one-sided, though, is to make the counter-argument to the regularly touted "tax 'em more, regulate 'em more" that is trumpeted in the media.

You are correct that corporations are not often compelled to think long-term, but then neither are individuals, nor is congress. Laws that were passed decades ago to salve a short-term economic problem have created long-term failures in our ability to fund our government's necessary operations - and by necessary I mean to provide the national defense and police the streets, though I prefer to include education in there as well. Americans regularly complain about corporations not doing their part to help out and then complain when corporations leave our shores with their production. If we continue to expect corporations to tolerate the injustices of the American legal system, then we will continue to see them leave. If we as individuals would not reasonably decide to do something personally, why expect a corporation that answers to many individuals to do any better? Why not expect the government which answers to us all to do better? That is the main point of my post, to defend the villified "evil corporations" and point out another point of view.

I think you raise very valid points. I do think, though, that some elements of economics and business are attempting to scratch the surface on considering the environment and on thinking of people as assets instead of liabilities. As those studies continue, hopefully we'll see more long-term viewpoints enter into the thinking of corporate management. We, as customers and employees, though, have to expect more from ourselves if we are to expect so much more from others.

melissa said...

Both of you are right on the short term thinking (apologies in advance for fuzziness...it's late and I'm getting behind on all of this stuff...)but there is still more to it.

Yes, it is cheaper to send jobs overseas for all of those reasons you mentioned. But the other sad truth is that in a lot of cases, Americans aren't as qualified as they used to be to perform those jobs. I continue to be shocked at the things that people just ten years younger than me, and I'm not that old, don't know. And don't even get me started on what my own children aren't learning.

When you combine the short term thinking of corporations, with the short term thinking of educational policy, and the amazing lack of work ethic that is starting to creep into our culture, it is little wonder that companies are choosing to send jobs elsewhere. Even when there have been tax incentives for them to stay.

Our broken economy has issues from so many different directions. There will be no one, or two, or three things that will get it back on track. I agree that some of your suggestions have merit. But another basic fact is that this country is not producing the brainpower it once did. And this NCLB stuff? Is soooo not the answer.

On another note...I'm going out of town for a few days. I have posts that will auto post, but I won't be checking anything until at least Friday morning. So, if you don't hear from me, don't take it personally. :)

Robert said...

Soon I will have to post something I wrote about education several years ago. I was reading over it, and a lot of it still applies. One idea that is very much in line with what you are talking about, Melissa, is what I call "academic inflation". Forty years ago, people who had a high school diploma had a great chance to climb the corporate ladder if they worked hard and learned as they went. Twenty years ago, people probably needed a minimum of an Associates to hope for similar chances, and then it became a Bachelors, and now Masters Degrees are becoming more and more necessary to reach certain levels. Absolutely, amazing individuals transcend these requirements and make it despite the "system" but it has become hard for the average person to rise without getting a certain level of education. Absolutely, one reason for this "inflation" is due in part to the shift in education away from basics towards "feel-good" educating. It has become so terrible to fail students, so instead we pass students who do not understand a subject. They continue to wander through the system and are shocked when they meet a world that does not care so much how they feel about being a failure. It's a tragedy.

This post has definitely been thrown together quickly, but again, I plan to write a full post on the matter soon. For now, enjoy five days of posts from Todd and me coming from a great chat we had tonight.