This is one of the greatest lies that has been sown in the U.S. for over a century. It is the idea that businesses are harmful to consumers because of their pursuit of profits, especially for shareholders, and that governments are there to protect the interests of the consumers. It’s a lie so detached from reality that it is an anti-truth—as in it has a negating effect on truth itself and is not simply a falsehood.
This notion is surprisingly complex and contains a multitude of assumptions that must be acknowledged to understand how the concept itself came about. I won’t be able to get through all of them, and will instead focus on what I believe to be the most important. The thesis to keep in mind: businesses and government are neither your friend nor your enemy.
This article is not comprehensive by any means; it but scratches the surface of the topic. It should, however, serve as a sufficient starting point.
Evil, Greedy Capitalists
We’ll begin with first half of this article’s title: businesses are your enemy. This simple statement makes several implicit assumptions. They include:
“Business” is an abstract entity that exists separately from people
“Business” as a mechanism (i.e., the act of doing business) is antagonistic to consumers
“Business” is an amorphous collective and that all businesses are the same
The act of pursuing profit is evil
Let’s tackle each of those in order.
“Business” As an Abstract Entity
A company, or a business, is not some abstract entity that simply begins existing from nowhere—it is composed of people. Those same people are also consumers in the same market(s) the company serves.“Business” As an Antagonistic Mechanism
The act of “doing business”, which is offering goods or services in exchange for money, is not a force that operates against the needs or desires of consumers. It’s a process by which people pool their resources and labor to produce something of greater value than if the people operated independently from one another.“Business” As an Amorphous Collective
Simply put, saying all businesses are the same is like saying all people are the same. Businesses all have the same goal—to maximize profits and minimize losses—but the sheer variety of businesses operating in different markets and producing different goods and services should tell you they aren’t identical to one another. To continue with the analogy to people, all people have the same goal—to pursue their own needs and desires over the course of their lives—but we know that all people are not identical to one another.Pursuing Profit Is Evil
Being profitable simply means that the company produces something of greater value than the cost of its resources and labor. If a company’s operational costs exceed its revenue, it will eventually run out of money and go out of business if no corrective action is taken. Essentially, profit is the mechanism that informs a company whether it’s using resources and labor effectively.
Even with those assumptions corrected, it’s still easy to believe that businesses are the enemy of the people. Why? Simple: businesses have regularly harmed people in pursuit of profit. After all, why would businesses commit such acts if they weren’t evil? To that, I ask: why have humans ever committed acts of harm against one another over the course of our history? Asserting that the harm committed by a business is somehow unique abstracts it from the people that make up said business and disregards the evils committed by individual persons throughout human history.
What that means is we’re asking the wrong question—in fact, we have it completely backwards. We should be asking: why don’t businesses commit more acts of harm than they do today or have done historically in the pursuit of profit? The answer is rather straightforward—it’s too costly. The advancement of human society, particularly through the accumulation of experience and development of new technologies, has reduced the cost of business, both in terms of money and human life.
Neither government regulation nor unions bear the responsibility of reducing worker injury and death. That isn’t to say they’ve had no effect—I’m sure one could find isolated cases of benefit throughout history. They are, nevertheless, even when combined, not the primary contributor. Undoubtedly, someone will ask for data supporting such a claim, but it’s not an empirical claim—it is a logical one that stems from the fundamental belief that humans are tragically flawed creatures and must learn through experience. It is often said that regulations are written in blood, but that isn’t quite true because it doesn’t capture the whole picture. It would be more apt to say: human knowledge derives from the blood of our ancestors.
It’s important to recognize that the market is a process, not an entity, and the force behind that process is natural selection. If a business regularly does something we, the people, do not like, the naturally selective force of the market economy will correct it—either by forcing change or bankruptcy.
The Parental Surrogate
Let’s now look at the latter half of this article’s title: government is your friend. Or, more specifically, government exists in part to protect the consumers from the greedy action of businesses. Here are some of the implicit assumptions made:
“Government” is an abstract entity that exists separately from people
“Government” is a force for good
“Government”, as an entity, will prioritize the interests of the people above all else
“Government” has the competence to mitigate the harms of business or prevent them from outright occurring
We’ll tackle these in order as well.
“Government” Is an Abstract Entity
Like businesses, governments are made up of people who are also part of the economic market as consumers and may have personal investments in any given company. Likewise, those individuals will have their own self-interests they will attempt to pursue.“Government” Is a Force for Good
You need only look at the horrors of the 20th century to see that this isn’t true. Historically speaking, governments have oppressed their people more than they’ve helped.“Government” Prioritizes the People
Governments, like businesses, are independent institutions with their own interests. Likewise, they are self-preserving, meaning they will prioritize above all else whatever maintains their existence. A company does not seek to put itself out of business and a government body does not seek to displace itself.Governments Are Competent
Governments, like all human enterprises, pull from the same aggregate knowledge. All attempts to mitigate or prevent the harm of businesses against the people will necessarily flow from the same processes. Worse yet, however, is they have even greater limitations than businesses. Governments are not beholden to natural selection because there is no threat of bankruptcy. As such, they are even less competent than businesses.
Disentangling the misconceptions around government will be more difficult, I suspect. There’s a common belief of what I call do-somethingism, which compels people to think some kind of action must be taken in response to an issue, and that if the businesses won’t do it, it must be the government. This is the theme of the article.
First and foremost, the only tool in the belt of the government is law, and the law is a hammer. Why do you think a judge wields a gavel? The law strikes with blunt, indiscriminate force against all violators, and that is necessary for it to be effective. The authority of law is dictated by its weight, and that weight must be heavy for would-be violators to take it seriously. If there is no weight, then the law is merely, as we like to say, a slap on the wrist. And if the worst consequence is a slap on the wrist, then it won’t stop any egregious violations.
The limitation of this is that when your only tool is a hammer, every problem becomes a nail. Blindly whacking away with your hammer at every problem that comes up is a good way to cause more damage to the structure you’re hitting. And in this case, that structure is society itself, because the economy is the lifeblood of society. There are many problems that require either a finer and more delicate response, like pliers or a screwdriver, or something of even greater magnitude, like a wrecking ball or a bulldozer.
Thus for the law to succeed in situations like these, it must either be given disproportionate power so that the hammer can be wielded like a wrecking ball, which risks enormous collateral damage, or disproportionate restriction to minimize external damage, which ultimately amounts to a slap on the wrist. In both cases, the outcome is disproportionate to the problem.
What, then, do we do when a company misbehaves in a way that harms society? It’s an open-ended question with no one answer. In some cases, legal action can be taken, such as with theft or contract violation. In others, such as environmental damage or anti-competitive practices, the answer isn’t so obvious. As is the case with everything else in life, there are no solutions—there are merely tradeoffs. Immediate reaction in an attempt to take punitive measures against the offender will often cause more problems for society, especially considering the long-term consequences likely weren’t accounted for. Sometimes, the best we can do is simply try to understand the causes behind the problem and assess how to better handle these situations in the future.
But Are You REALLY Sure?
There are some objections to this stance that I anticipate. I’ll cover those now.
If we know from experience what kinds of problems businesses can cause, why shouldn’t we erect government institutions to regulate them and mitigate or prevent the problems?
You’re giving the government the authority to do things beyond its scope by concentrating power in the hands of the few. Let’s say you do create some government institution to regulate a specific part of business. That institution becomes a single-point-of-failure that gives businesses an obvious and simple path to use for their own benefit. Put differently, you create a government-operated monopoly. If I ran a business and I knew some illegal action I took were likely to be discovered by this regulatory body, I would either bribe them to look the other way or have a shell company set up ready to take the fall; regardless of which, my losses are minimized and profits maximized. Alternatively, I may just have my company eat whatever consequence is imposed. In all cases, this simply becomes the cost of doing business.
Okay, but the government is accountable to the people—that’s how democracy functions, after all. If something like that happens, we’ll vote the people responsible out of office.
Let me ask you this: how often have you voted for the head of an institution like OSHA or the EPA? And how often have you voted for any regulations they’ve passed? Likewise, when was the last time one of their directors received either a lengthy prison sentence or a bankrupting fine?
It would be too time-consuming and inefficient to have the people vote on every single official running one of those agencies as well as all of the regulations they want to pass. Besides, we can have other elected representatives, like Congress or the President, take action against them.
Oh, you sweet summer child. If it’s too inefficient to have the people vote on that many things, wouldn’t that therefore imply the government has become responsible for too many things? And if, for some reason, it’s not true that the government has become responsible for too many things, do you really want to give that much power to something without direct voter accountability? Recall the rallying cry of the American Revolution leading up to the war: “No taxation without representation.”
On the second half of that, how often have any federal government agencies been restructured in response to the will of the people, and how often did that actually yield results that were aligned with the will of the people? They’ve certainly been restructured, but you will be hard-pressed to find situations where that did more benefit than harm to the citizens. Additionally, how often have you seen any of those agencies completely dismantled? Not very, that’s for sure.
Another point to consider: what’s the ratio of new legislation passed compared to previous legislation being repealed? I imagine there’s a staggering difference. Keep that in mind, because it’s an indicator of just how difficult it is to repeal legislation once it’s passed. That means if you rush to enact some new law or regulation and it turns out you made a serious error, the odds are not favorable that you can undo the damage.
Are you saying we should just not have laws?
Not at all—laws are necessary because society only operates within constraints. The government exists primarily to protect individual rights and adjudicate situations when the rights of multiple individuals collide. Secondarily, it exists to maintain civil order.
Then what should we do when something bad happens as a result of business?
Nothing, at least not right away. We’ll handle the problem the way humanity has handled every other problem in the past: deliberation and ingenuity. That means the responsibility is on us, the people, and not the government. The more self-control you have, the less government control you need.