or, You Should Hug a CEO Today
One of the foundations of a conservative political ideology, possibly the most critical, is the understanding that businesses create everything that we have and enjoy. The food in your fridge, the fridge itself, the kitchen it sits in, the lumber and paint and everything that built the structure. All created for the profit of some business. The car you drive, the music you listen to, the medicine you take, the website you’re reading right now and the computer you’re reading it on. The hand-stitched, organic-cotton toe socks you bought from the neat hipster shop directly from the person that made it. The mass transit you ride. The public education you enjoy. The money you donate to charity. All of it comes from businesses.
“Mass transit? Public education? Charity? What?” Yes, every last bit. It’s obvious when you buy something like an iPod, that yes, this was built by Apple, a for-profit business. And yeah, of course cars, appliances, construction, music, these are all for-profit enterprises. Less pleasing to some is the fact that even such necessities as farming and distributing food are run for profit, but we all know deep down that they are. And the handmade artsy stuff you buy directly from the handmaker, okay, they are technically a business of one. That hippie is one of those CEOs liberals like to complain about. Fine.
But government programs? Cops and teachers?
Emphatically yes. Provided to us and paid for 100% by for-profit businesses.
Not only are all the buses and trains and school buildings built by businesses, but every dollar that the government spends on programs is taken directly or indirectly from, or because of, some business’s profit. No business; no productivity. No productivity; no profit, no payroll. No profit or payroll; no taxes. No taxes… no government programs. Condense that, and: no businesses, no government programs. It really is that simple. Every service the government provides is, ultimately, provided by businesses.
This is clear enough in the case of corporate income taxes. But I’m talking about everything. Income taxes work the same way. Your income occurs because you are being productive for a business. Even if you’re making and selling your own stuff out of your own home–now you’re a small business owner. Your income still occurs solely through the mechanism of business. And if you’re an employee, income taxes mean that your company has to pay you that much more to justify your work. If taxes drag a company’s employees below a livable wage for the area the company is based in, employees will no longer be interested in taking a job there. They have to pay you more to make up for it. One way or another, that tax is coming out of the company’s balance sheet.
Property and sales taxes too–the money you use to pay them found its way into your pocket through business (even if it was redirected through the government first). No matter how you look at it, business is the ultimate source of every dollar that goes to teachers’ salaries or Social Security or NASA or AIDS programs in Africa or WIC or the paycheck of someone tapping on a calculator at the federal building downtown or whatever else the government decides to do. Every dollar you give to charity was paid to you, or to someone, by a business, in exchange for productivity. Whatever it is, businesses provided it.
To visualize the overall concept: the economy is, basically, money in motion—and businesses provide the locomotive force. Businesses and profit are like the gas in the car. You can have a really, really snazzy car, but without gas, it’s not going to get you anywhere.
Look at it this way. If Ford makes 10,000 Mustangs and puts them on the market, obviously they are providing stuff to the economy right there in step 1. That’s good, we like Mustangs, we’re better off if they exist rather than not. Look at the rest, though. The government (making up numbers) taxes their profits and takes a million dollars. The cars sell, providing a million dollars to the government in sales tax. Ford pays their employees, and the government taxes their income for another million dollars. The employees own homes thanks to their work at Ford, and pay property taxes for another million dollars. So now the government has four million dollars. The government then spends that four million dollars on Medicaid. In reality, Ford’s productivity directly and indirectly provided that Medicaid insurance, not the government. The government was just the middleman. If Ford wasn’t there doing business, none of this money would be coming in for the government program. If you take away Ford’s ability to do business or to make a profit, guess what—the government benefits go away too.
One more analogy. Say Fran owes Irene $100. Paul has lunch with Fran, and says, “Hey, I’m going to see Irene later, I can take her the money you owe,” which he does. Nobody would say that Paul paid Irene $100. Fran did. It was Fran’s money, Paul just carried it. In the same way, when the government writes Fran a Social Security check, it’s not the government’s money. The government is just carrying it from the businesses and people it was taxed from, all made possible solely thanks to the productivity of businesses. We might all get together and agree that Social Security is a good thing and this is how we want our society to conduct itself, but we must never lose sight of the fact that it’s only thanks to business that any of it can happen. If we do, we end up despising Fran for being greedy and giving Paul a trophy for his selfless generosity, even though Fran really paid Irene.
So, what’s so magical about businesses, that everything else in society depends on them? They are productive. They’re not just hoarding money, they’re using it to build stuff or do stuff for people. That’s it. The more stuff they make or do, the more stuff per person there is in the world, the richer everyone is. Principles of supply and demand say that the more stuff there is, the cheaper it is for anyone to get the stuff–that means, the more and better stuff businesses produce, the more your dollar is worth. So when a business is rolling in money and making tons of stuff, you as a consumer are reaping the benefits as well. So to repeat that point (it’s important): the more businesses produce, the richer everyone in the world is.
Before I start getting hate mail, let me include two caveats.
First, sometimes businesses do things that are bad for their employees, for their customers, for the world in general. Sometimes businesses can do things that are truly evil. This is often done via a complicit government, and whenever this happens, it needs to be stopped.
And second, of course the government provides goods and services too. Productivity isn’t restricted to private industry. There are some things that only a central government can provide effectively, and that’s well and good–in some cases, absolutely necessary for our society to run. This is a complicated topic deserving of its own discussion. However, certain facts should be apparent. Given that the government is by definition a monopoly, and–by popular consensus–only marginally competent and often corrupt, it’s always going to run things less efficiently than a competitive market will. That being the case, the government’s role is to do the things it has to do, as efficiently as it can manage, and then to do as little else as possible.
Now, with those two issues in mind, the basic framework remains. Everything in our society, whether it’s obvious or not, whether it masquerades as free or not, no matter who or where you get it from, exists directly or indirectly because of for-profit business. And the more businesses produce, the more productive and efficient the overall economy is, the more our money is worth. Therefore, when businesses succeed, we all become richer.