We live in an era when the reputation of big business is under siege.
Public opinion polls show it is held in lower regard today than the presidency, our medical system, labor unions and newspapers.
Among young people and Democrats, the word “socialism” now polls better than “capitalism.”
And Republican president Donald Trump – a businessman himself – makes regular broadsides against free trade, outsourcing and globalization.
Those are fundamentally anti-business positions.
Small business does poll a little better than big business. It’s not hard to see why.
It is easier to identify with a family firm or small group of people working together.
Multinationals and other major corporations seem impersonal, faceless, monolithic. No one gets a warm, fuzzy feeling when they think about McKesson or Dow Chemical.
We tend to trust small businesses more than big businesses. Yet that trust is not always warranted.
Can you really believe you have a greater chance of being ripped off at your local Toyota dealership than on the “Buy Here, Pay Here” lot down the street?
Moreover, there are plenty of things that big businesses do that small businesses simply can’t.
Without big business, we would not have…
- Ships, planes and cars
- Oil and gas
- Highways, bridges and airports
- Houses and commercial buildings
- Mortgages and credit cards
- Electricity and major appliances
- Most of our food
- Lifesaving drugs and medical devices
- Computers and smartphones
- Internet, streaming and other online services
- A broad array of low-cost clothing and home furnishings.
Some argue that big business is monopolistic – that it stifles competition, raising prices.
Not always. In fact, not even generally with antitrust regulators ever alert.
And consumers are the winners.
For instance, what do Google, Twitter, Instagram, Snapchat, Facebook and YouTube all have in common?
True, it isn’t easy to compete against “free” as a business model. But that doesn’t mean competition doesn’t exist.
If you don’t want to do your internet searches on Google, for example, you could use Yahoo, Bing, AOL or DuckDuckGo, among others.
You don’t, however, because – like most internet users in this country – you believe Google provides better search results.
Is massive consumer preference a bad thing?
Business drives innovation. It creates jobs and provides worker training. It generates the profits that fund countless charities. And it pays billions in state, local and federal taxes each year.
Yet the left-leaning Institute on Taxation and Economic Policy complains that 60 major companies paid zero in federal taxes in 2018.
That sounds bad at first blush, but far less so on closer examination.
For starters, no company owes a penny more in taxes than the law requires. Management, in fact, has a fiduciary duty to maximize profits for shareholders.
That doesn’t mean just maximizing sales and keeping a sharp eye on costs. It also means managing the annual tax bite.
The corporate tax code is designed to incentivize research, capital formation and job creation. Many productive investments would not be made without the inducements in the code.
I’m a longtime advocate of simplifying the tax code, incidentally. (Tax reform was a step in that direction but didn’t go nearly far enough.)
Over the years, I’ve noticed that the readers who oppose replacing the loophole-ridden system we have with flatter taxes are the same ones who complain that “corporations aren’t paying their fair share.”
Go figure. Especially since no one claims that what these corporations do is illegal.
The other factor – one that shows not just an anti-business attitude but gross ignorance about business generally – is that the list of 60 big companies that didn’t pay federal taxes in 2018 included many that had net operating losses.
Hello? Companies pay taxes on profits, not losses.
Of course, some people hold big business in disfavor because every misstep is front-page news.
Is there anyone alive who doesn’t know about Boeing’s problems with the 737 Max or Facebook’s pending multibillion-dollar fine for violating customers’ privacy rights?
Here’s a news flash. Businesses are run by fallible human beings. (As are governments and nonprofits.)
Sometimes they make mistakes, breach contracts, use poor judgment, harm individuals or damage the environment.
When they do, the transgressors should be punished.
But that doesn’t make capitalism wrong any more than democracy is wrong when a congressman is found to have stacks of $100 bills in his refrigerator.
Big business vastly improves our quality of life and standard of living.
It provides jobs and creates investment possibilities. It delivers opportunity and prosperity.
Shouldn’t we be singing its praises rather than tearing it down?