Monday, July 4, 2011

How Did Good Businesses Get Bad Reputations?

It is common to read, hear, and see imagines of large corporations as the "bad guys": symbols of greed and heartlessness, eager to take money in any form, exploiting workers, insensitive to the concerns of the poor, and uncaring in regard to preserving the earth's environment. Business, you might think, is simply evil.

How did this stereotype develop? To accept these ideas, one would have to forget that millions of poor people have managed to improve their lives by working their way up in business. Every American, not only the rich and middle class, has experienced an increase in her or his standard of living because of business activity: even the poor have cell phones, televisions, and a host of other gadgets.

Columbia University's Professor Thomas Woods writes:

History textbooks love to highlight the villainous American businessmen who have "exploited" workers, taken advantage of the public, and wielded so much power. Government officials, on the other hand, are portrayed as benevolent, self-sacrificing crusaders for justice, without whom Americans would be working eighty-hour weeks and buying shoddy goods at exorbitant prices. This is what every students believes as he leaves high school (or college, for that matter), and it's hard to blame him. This kind of thing has been taught, day after day, for years.

Although we might disagree with Professor Woods' use of the word 'every' (surely not every student has fallen for this propaganda!), his generalizations are largely correct: and they hint at the source of this incorrect but pervasive view: one reason for painting such a dim picture of business is to make government look good.

It is, after all, the government which taxes heartlessly - even the poorest person must pay sales tax, property tax, gasoline tax, cell phone tax, and dozens of other taxes. It is the government which creates no wealth: the total amount of value in the economy remains the same as the government taxes and spends. Even when a government prints more paper money, this does not create value: it simply dilutes the pool of wealth, making each dollar worth a little less as each new one is printed. The government increases neither the total nor the average standard of living for Americans.

So beware over-simplified paradigm of "business bad, government good": remember that business is simply the activity of ordinary people going about their lives. Government is the activity of regulating people's lives. If there were no business, there would be no life to regulate.