Getting Down to Business

In the first post of this series, I explained the danger to democracy as financial mega-backers choose our political candidates for us and then influence our votes.  The usual source of their big money is big business.  Now this second post will explain why big business strives to gain ever more control of government.  In short, it’s just doing its job.

You may have heard the saying that the purpose of business is business.  That simple statement reflects the whole story.  Although business owners themselves might pursue other purposes in life, businesses have only one purpose, which is to make money.  The job of corporations is to return value, which normally means money, to their investors.  The corporate executives who achieve high financial returns for their shareholders are in turn highly rewarded.  Investors want not only financial gains: they want them soon.  If a business does not return enough value fast enough, investors move their money elsewhere.  The business that they leave behind may shrink or shut down causing layoffs, abandoned buildings, lost tax revenue, and other costs to the rest of us.  On a much larger scale, the economies of entire nations can be disrupted as investors move billions of dollars out of one country and into another.

You may have noticed that sometimes businesses do give, but they give in order to get.  If they were just giving away value without expected return, they would be robbing their shareholders.  Their giving is an investment.  For example, a business might offer a prize drawing in which a small number of contestants will win while the thousands of contestants who provided their contact information will become sales targets.  A business might create a foundation to support worthy causes and thereby gain valuable advertising, public relations, and tax benefits.  A business might contribute to a political candidate with the understanding that upon election the politician will address its concerns.  The same business might also donate to the opposing candidate to assure a return on its investment no matter who wins.  Giving in order to receive is just another way for a business to pursue profit.

Without government controls, businesses can maximize their short-term profits.  Without regulations, a business is not responsible to pay its employees a living wage.  Indeed, given its purpose, it should pay the lowest wages that will still generate sufficient worker output.  Business is also not responsible to provide a safe workplace beyond what is necessary to avoid lowered productivity from illnesses and injuries.  It is not responsible to protect our natural environment although it may want to conceal activities that could provoke sabotage or boycotts against it.  A business is not responsible to treat consumers fairly or to provide reliable products beyond what is necessary to maintain an optimally profitable customer base.  A business may misrepresent itself or pay bribes in order to win contracts.  Businesses will collude with each other and evolve into monopolies that can charge customers more money in the absence of competition.  In short, without government regulations, a business is not responsible to behave ethically if it can make more profits by immoral or amoral behavior.

However, businesses are not left to operate on their own.  In America, for example, they are subject to government regulations on minimum wages, working conditions, environmental protection, product safety, marketplace competition, ingredient disclosures, and so forth.  Other laws allow employees to form unions.  Employees and customers can sue businesses for mistreatment or for harm from faulty products.  Anti-trust laws attempt to prevent collusion and monopolies.  In sum, although there may be great variation from one country to another, businesses regulated by government cannot legally do whatever they want.

Compliance with so many regulations costs businesses a lot of money, which decreases profits.  Therefore, they must strive to decrease problematic regulations and to arrange for regulations that will favor their profits.  They can control regulations by controlling the regulators, that is, by gaining control of the government.  Business has been pursuing the conquest of government for decades, or should I say for millennia.  Do you remember Ronald Reagan’s famous declaration that government is not the solution to problems but instead is itself the problem?  The problem for whom?

Governments complicate the pursuit of profit even more nowadays because business is international.  The material resources, employees, processes, physical plants, investors, and customers of businesses are networked all over the world.  However, that one world of business is divided into nearly two hundred sovereign countries.  Each country imposes its own version of regulations and ways of operating.  For example, one country may criminalize corporate bribes while another country may require them.  Although the variation among countries also creates opportunities for profit, dealing with the kaleidoscope of national differences is complex, burdensome, and expensive.

To gain control of regulations in America, as mentioned previously, business interests have to find and fund amenable political candidates and then persuade us to vote for them.  To that end, those business interests would like us to believe that what is good for their profits is also good for the rest of us. They are willing to deceive us if deceit would bring success.  For example, they tell us that our country is overregulated in hopes that we will support their deregulation.  Another fallacious business claim is that businesses and their executives are heroic “job creators” who should therefore be supported.  However, the obvious fact is that jobs are created when very large numbers of people have more money to spend.  Another fallacious business claim is that profits from business will “trickle down” to the rest of us.  Maybe those of us who sell goods and services to shareholders and executives will get some “trickle down” benefit, but a much larger proportion of us will continue to lose purchasing power as the rich gain more.  The “trickle down” argument seems especially arrogant by suggesting that we should be happy to get some sustenance dropped from the banquet tables of the rich.  Another fallacious business argument is that the gains for the rich will be only one facet of the overall gains that will accrue to everyone.  This argument hides the fact that the same business drive to maximize profits for its shareholders and executives will continue relentlessly to the detriment of the rest of us.  Given the same pattern, the rich will get richer while many millions of others will be left farther behind.  Unfortunately, such untenable, arrogant, and cynical business arguments cause many people to stand by idly while business takes over our government.

Here are some modern examples of the business profit motive in action.  I think the purist example comes from 1994 when the chief executives of seven major tobacco companies swore under oath to Congress that they believed nicotine is not addictive. (You can watch that travesty at https://www.youtube.com/watch?v=MJBaBJawnSYA.)  In other news, a giant chemical and seed company hired a consulting firm to develop a plan by which the company essentially could dominate the world’s food supply.  Pharmaceutical companies have increased the prices of life-saving drugs beyond the reach of many people who need them while reaping corporate profits averaging between fifteen and twenty percent per year.  Adding to those profits at our expense, our government has barred Medicare from negotiating for lower prices.  Before the environmental regulations that are now being rolled back, businesses dumped waste into rivers to the extent that in 1969 a major river, the Cuyahoga, caught fire (for the thirteenth time).  Before the Affordable Care Act, which is under attack, health insurance companies had the legal right to cancel the insurance of a paid customer if his or her health care became “too expensive”.  These days, the financial services industry has been fighting against legislation that would require financial advisers to put their clients’ financial welfare ahead of their own interests.  Leading up to the Great Recession of 2007, major lenders and investment banks adopted unsound business practices that took them and the world economy to the brink of collapse; and then they turned to us taxpayers to save them (and ourselves).  Corporations and their politicians are still denying the existence of global warming caused by humans and are fighting attempts to make changes that would hurt their profits.

That list could go on and on.  A business action that is planned and implemented by identifiable executives may harm millions of people, but no one goes to jail.  Eventually, an offending business may have to pay a fine, which it can absorb as a cost of doing business.  In the end, the net profit is still great.

Dave

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Welcome to “How It Works”!

In early November, and again in two years, we will face profoundly important elections at every level of government.  I’m particularly concerned about the national elections, but I know those national candidates arise from state and local elections including primaries.  The financial mega-backers of today’s politicians understand the candidate supply line very well.  They know how it works.  They have been laying their candidates’ tracks for years.  It is an easy business plan to write.  While we are out mowing our lawns, people with a lot of money are deciding what our candidate options will be on election day.

The coming elections are not about the traditional Republican and Democratic parties.  Judged by their historic principles, neither of those parties still exists.  Nowadays, a critical mass of politicians in each of those nominal parties is bought by essentially the same fraternity of brokers.  Those candidates attain and keep their elected positions by accommodating the interests of their financial sponsors.  The politicians may claim that they are independent and that they hold the same political beliefs as their financial backers; but in simple terms of cause and effect, the money is in the driver’s seat. The politicians don’t tell the money what to do or else: the money tells the politicians what to do or else.  The brokers and their elected officials also know how to manipulate our voting behavior.  They know that scare tactics and disinformation work.

But what’s the big deal?  Are we not still able to buy more stuff and pursue our pleasurable activities?   I think the most profound risk is that while we busy ourselves with our personal lives, the United States may become a de facto authoritarian state.  That ancient, primitive form of government, the tool of kings and warlords, can take hold over time without anyone intentionally choosing it.  Authoritarian rule is the default system that lies at the bottom of the slippery slope of politics.  It is the lowest form of government, and huge masses of people have struggled for centuries to overcome it.  Authoritarianism is easy to understand.  Do as you’re told, or get hurt.

There are many small signs of our downward slide toward authoritarianism and a few large signs.  We voters are supposed to choose our representatives; but instead, gerrymandering enables the representatives to choose their voters.  Political operators find ways to deter large numbers of our citizens from voting.  Every day some of our politicians attack our free press, demean our system of justice, and try to politicize the courts.  Many of their fellow politicians become complicit by their silence.  We may think America is a model of democracy, but it is now ranked far down the list of democracies worldwide.

For the mega-brokers who are driven by profit rather than by political philosophy, authoritarian rule may be the most practical and predictable form of government for them to make the most money in the short term.  (And, by the way, I suspect they would enjoy having even more power over other people.)  At the same time, I think many Americans would prefer an authoritarian regime if it would impose their views on everyone else.  Since their beliefs cannot compete successfully in a democracy’s open marketplace of ideas, those people would prefer a powerful ruler who would force their ways upon the rest of us.

Authoritarianism is a very old human story, and history has repeatedly shown us the results.  One usual result is a sharply skewed distribution of wealth with a very small percentage of rich people and a huge percentage of poor people.  Another usual result is the persecution of people who in some way are not like the ruling group.  Another usual result of authoritarian government is the growing civil unrest that I think arises from an irrepressible human will to justice.

By comparison, democracy appears to be the surest path of human progress in the long run although that progress may be slow, erratic, and inefficient, especially if viewed from a business perspective.   I think democracies also tend to keep most authoritarian sociopaths in check.  The Framers of our Constitution launched a grand and ongoing experiment in democracy.  We have inherited that ongoing experiment, and, after more than two hundred years, it could collapse while in our care.  Failure requires only that we stop working at it.

This blog is part of my tiny personal effort to support democracy.  While I recognize that this blog and my renewed political efforts may prove useless, I’ve decided that they are my most appropriate response to our national situation.  Please consider that all we ever have for sure is our choice of our most appropriate response to a situation.  Family, friends, possessions, health, knowledge, life itself can be taken from each of us; but while we are yet aware, are yet human, we still have at every moment our choice of our most appropriate response to our situation.  What is your most appropriate response to our country’s current political situation?  Regardless of what you think of the rest of this blog, that is the ultimate take-away question.  What is your most appropriate response to this situation?

In future posts, I plan to write about some of the forces that are profoundly affecting us and future generations.  Although my personal values may show between the lines, the purpose of this blog is not to criticize or to pronounce judgments.  The purpose of this blog is to explain how things work.  When I want to add my recommendations on some topic, I’ll place them in a separate, labelled section of the post that can be easily found or ignored.

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In the next post, we will get down to business.  In the post after that one, I’ll explain how to make lots of money.  Later, we’ll confront some of the fallacious forms of argumentation that continually assault us online and in the news.  Other topics in the hopper are forms of government, health care, comparing people, what I call money suckers, and government regulations that some people love to hate.  Tune in for those and other topics amidst the political whirlwind that will descend upon us in the coming months.  Maybe you won’t find any new ideas in this blog, but maybe some old ideas will be presented in a new way.  Maybe we will recognize some comedy in our national life, but it is not humor that compels me to launch this blog.

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Dave