What’s all this Business vs. Government nonsense!?



I’m introducing a controversy alert to my blogs. Why? Because I’m talking about politics, and people get worked up about these things — when really it’s not all that controversial.

Regardless, this is a comfortable level of controversy. Not too much, not too little. … just enough to keep you reading.

A lot of people clamor about REGULATIONS, and people divide into little pro-business or pro-government camps. Also, some people are angry at big businesses, and others claim that government regulation is the way to go. Of course this is how Americans come to view issues — in a very polarized way.

I’ll make up a fictional country … state X. One where the government is separated into three parts — a legislative, executive, and judicial branch with checks and balances (because this state is paranoid about somebody getting too much power). Also, state X’s government exists with the purpose of securing life, liberty, and property.

QUICK: If you aren’t up to speed on what a state is, you probably need to read this to fully understand what I’m discussing here.

… Also, the fictional “state X” should sound familiar to all you … 😉

It’s all about the BUSINESS:

So, what does a business exist for? Simple. … itself. Also, business generally claims that currency and profits drive human innovation and change. Aside from these other claims, a business exists only to make a profit and to re-invest that money. That’s it.

As we know from capitalism (if not, read here), the idea is that the business employs people to make something or offer some service. And competition drives market prices.

So businesses keep track of competitors, try to develop markets (which could be any product or service), sell as many things as they can, pay labor as little as they can get away with (unless they’re feeling philanthropic), and want to end up with a profit to reinvest. That’s it.

Naturally businesses have invented all sorts of ways of complicating this, and come up with new roles, bureaucratized, and become formalized organizations. Because each of these organizations are an aggregation of people, the organization itself can now claim to be a corporate “individual.” This is the same logic as a state, and, in fact, local governments can be considered corporations as well.

Corporations are afforded quite a bit of freedom in state X. Why? Because they’re considered individuals, legally speaking. Since state X’s SUPREME COURT has consistently upheld that corporations are individuals, I doubt that status will change anytime soon.

My job is to GOVERN!

So, what does government exist for? Well, the purpose of government is a bit more complex than that of a business or corporation. But, generally the job of the government is to enforce the theory (sometimes procedurally written in constitution form) that was initially created — however it was written. So instead of profits, the outcome should be measured by how well the principles of life, liberty, and property were upheld.

So, state X exists to preserve individual rights of life, liberty, and property. Hmm … so if corporations are legally considered individuals, then they are afforded the same rights as flesh-and-blood individuals.

Here’s where things get a bit grey.

Flesh-and-blood individuals existing in a state have to give up some of their absolute freedom for the sake of everyone. So, it must be the same for businesses as well. The theory is that if an individual gives up some of that absolute freedom, and consents to limit it to some extent, then there are rights guaranteed in return.

What do flesh-and-blood individuals get in return? Well, lots of stuff aside from rights associated with life, liberty, and property, actually. Roads, water, police forces, fire fighters, sewage systems, schools, grants, loans, protection in an international environment (more on this to come), and all sorts of other stuff that nobody thinks of when talking about governments. So, corporations can make use of these public goods if they need to. So a trucking business, for example, can use public roads.

However, businesses, the same as people, must give up some of their absolute freedom. How do you get profit-interested maximizers to give back to the overall community? With some of their profits — because that’s why they exist in the first place.

Corporations (businesses) do pay taxes. Formally, the rate is 15%-35%, although it’s usually pretty low, or nothing at all, after tax deductions. Why do you think really good accountants get amazing pay? They know how to save corporations millions of dollars in some cases. Similar to super-wealthy people, they know how to use the system to avoid paying unnecessary money. People who can’t afford expensive accountants cannot do this … although if you’re low enough in the tax bracket, you’ll get your money back anyway. … Like a savings account without interest.

So wait, what’s the problem? IS THERE A PROBLEM?

What a mess. No wonder we’re all confused.

The so called “regulation” debate essentially boils down to the question: How much freedom should corporations have?

There was a similar debate back in the day about monopolies, and eventually monopolies were considered illegal (naturally one person can’t own an entire market for it to be competitive to others). So, now there is debate over how “individual” corporations can be.

There is a slight hiccup in the logic of state X. On one hand, state X wants to ensure life, liberty, and property to individuals. However, are there some “individuals” who count more than others? Eek. That’s a loaded question.

I encourage people to ask a few questions associated with this issue:

1) Are individuals (people or organizations) prone to corruption and absolute power? If so, how do you prevent that (or is it necessary to prevent it)?

2) Are individuals, at some point, expected to contribute more than those at the bottom, and, if so, what is the threshold of that?

These questions pop up everywhere. The infamous Tall-Mart (it’s a corporation in state X) pays pretty low wages while the owners make unheard of sums. Also, very large companies are contracting with other countries for lower labor, and thus barely interacting in state X’s borders aside from base operations.

Now, this can be viewed two ways. First, that the world is democratizing overall, and business (ironically by virtue of their greed and principles of low-cost labor and high profits) are contributing to increasing the standard of living globally. Or, you could big business as aggregated interest groups who want to control public policy in order to make sure that labor stays cheap, and profits are untouched.

In defense of the business-corporate moral conduct?

I’ve heard some jive talk about how corporations are philanthropic, give back to the community, and are essentially upstanding citizens. Well, sure they give a lot of money back. But it’s generally for a good PR image, to deduct taxes, and essentially use these dealings as advertising opportunities. If you think about it, every non-profit getting donations gladly slaps those donor logos anywhere.

However, it does do some good, and there are merits to money flowing from business to non-profits and charities (not that these two organizations are intrinsically more-moral than a business — because they’re essentially only tax statuses).

Investing in non-profits or charities theoretically creates a lasting institution that will make some specified positive changes in the world. This is probably better than wealthy individuals giving individual payouts straight back to everyone in society — because once the money is distributed among lots of people, I doubt that it would be very much money per capita, and it would most likely be given back to the companies anyway. Because people need to buy stuff.

Philanthropic pursuits aside, eventually there should be serious discussions about the limits of organizational “individual-ness.” To some extent, it has. Corporations cannot vote, but they can contribute limited amounts to campaigns — however, PACs and super PACs keep cropping up, and organizations can consequently contribute as much as they want.

Also, pretty recently, there has been chatter about actually making sure corporate accountants can’t find ways around paying substantial taxes. Those dirty words some people don’t want to hear … TAX REFORM.

But I’m by no means a numbers-obsessed accountant … so go ask them how it could be changed/made better.

WAIT! What about all these REGULATIONS again?

True. There are regulations that enforce minimum pay, safety and health standards, hiring practices, domestic and interstate trade laws, industry specific guidelines and codes, and some other stuff. Does this violate the individual status of the “individual-ness” of corporations?

Logically, no. Minimum pay, safety, health, and hiring regulations aim to ensure the life and liberty of employees … because they are individuals as well. In these days, a minimum wage is needed to buy goods (and obviously needs to be increased — I don’t really care what other propaganda is out there, and I’m not writing this to massage the egos of businesses), people need their lives preserved at work (hence safety policies), and everybody needs to have an equal shot and doing what they want (liberty).

As for trade, industry, building codes, ordinances, zoning regulations, and other stuff, well that’s done for lots of reasons. Trade regulations protect state and local interests. Building, zoning, and other stuff is to ensure that all necessary authorities approve of structures and businesses, and that there is a minimum threshold of the structure’s soundness. After all, there needs to be a minimum quality of building; and if not, it COULD lead to loss of life … thus violating individual rights. Look at all the crappy manufacturing/slave-labor sweat shops that collapse in places like Bangladesh.

So, if there is a system that ensures individual life, liberty, and property, then policy must reflect that. Considering that there are a lot of “individuals” in our fictional country X, then it’s easier to see the challenges associated with enforcing those principles while maintaining some overall sense of justice. Also, I have some pointers for you business-oriented types.

So, think about it you political junkies.



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