The Compassionate Outcomes of Corporations & Free Markets

“Indeed, a major source of objection to a free economy is precisely that it… gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.”  —Milton Friedman

Debunking Government Compassion

Government is not a compassionate entity.  Although some voters get what they want from government, this is not true of everybody.  And it is rare that anyone gets everything desired.  Those who disagree, with regard to any given issue, are forced to follow government rules and policies anyway.  Government forces people, at gunpoint, to follow its rules.

The Market

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In contrast to the government, there exists the free market.  In the free market, all people get what they want.  If ten percent vote for a green car—so to speak—ten percent get a green car.  If thirty percent want an orange car, so be it.  Freedom means that people get what they want.

A wise government finds ways to give the most freedom possible to the people.  An example of this approach would be, with regard to a healthcare-entitlement law, to give the entitlement money to the people and to allow them to shop for the policies they want, rather than forcing a single menu of options on every single individual through a process requiring every insurance company to offer policies that are identical.  Putting consumers in control would bring prices down and quality up, given a free market, which promotes competition.

What Is a Corporation?

The Corporation is an organizing principle to facilitate the cooperation of like-minded people in an attempt to make money.  Generally, a corporation is established by innovative people who wish to utilize their talents, in concert with the abilities of others, to bring their ideas into the world to the benefit of others.

corporationsThe point of a corporation, of course, is to enrich oneself by providing goods or services others will value.  Corporations can only make money if consumers choose their products freely.  Whereas government forces people to buy what they are providing, by way of taxation—whether they want it or not—corporations must entice people to give them money voluntarily.

Force versus Fairness

If government makes an expensive error, it simply raises taxes, thereby forcing the cost of government error on its clientele—the taxpayers.  If a corporation makes an error, it must be cost-free to consumers, since any unfair passing on of the cost of failure, by raising prices, would make the offerings of competitors more favorable in comparison, incentivizing consumers to make a change in their shopping habits.

To Delight Consumers

Steve Jobs said that the purpose of a corporation was to “delight customers,” claiming that, once this mission was accomplished, the benefits to stakeholders would follow.   A corporation is responsible for finding ways to manage risk with integrity, in order to protect the corporation, as well as consumers.

The Mutualism of the Market

Greed does not really play much of a role in free markets.  The owner of a corporation can be as greedy as he wants.  He can be Gordon Gecko incarnate, claiming that “greed is good.”  But he will not sell a single thing to the consumer, if he does not offer a good value at a fair price.  From the point of view of the consumer, it does not matter whether the producer of a consumer good is greedy or not.  What matters is quality and price of the item being offered for sale.  Also, if a business owner does not pay a fair market wage for labor, workers will not work for him.  The system of pricing signals, that are the hallmark of open and free exchange, will not allow the prices for goods or labor to go too high or too low, as long as government refrains dictating price controls on goods or labor.

Freedom & Innovation

There is a reason that such a disproportionately high percentage of new technologies have been invented in the United States over the last two centuries.  That reason is the abundance of freedom that has existed here with regard to the flow of ideas and information, coupled with the fact that people benefit from their inventions by being allowed to keep the fruits of their labor.  Low tax burdens and low regulatory burdens are a key component to the maintenance of this environment of abundance.

The Morality of Invention

The danger of increasing taxes and regulations on corporations is that the government then ends up changing the business environment from one of abundance to one of scarcity.  The twin burdens of over-taxation and rules-compliance raise costs to such high levels that nobody can easily benefit from the work it takes to bring an idea to fruition.

The new scarcity environment, that compels fewer innovations, can literally cost lives.  We run the risk that the new miracle drugs will never being developed—to cure cancer, dementia, arteriosclerosis, and other maladies.  New advances in automobile safety, workplace security, and identity-theft countermeasures will take longer to make it to market.  And human beings will suffer and die needlessly, as a result of the cancellations and delays in the development of inventions-that-could-have-been.

False Fairness

Socialist philosophies—such as communism and fascism—create the conditions of scarcity that promote the prevalence of societal ills that could be avoided with a free-market economy.  The tendency to redistribute wealth from those who work more to those who work less causes everybody to work less: hard workers stop working as hard, since it does not pay to do so; and less arduous workers find no reason to increase their efforts.  Socialists believe in equalizing outcomes, to be “fair” to everybody.

True Fairness

But true fairness is paying twice as much to the person who has done twice as much.  If someone saves money to open a business, that person should reap the rewards of having taken that risk.  That person’s money should not be taxed away and given to someone who has chosen not to save, but to spend money.

The Most Freedom Possible

Every problem the government confronts should be solved with the most freedom possible.  It is not only the wise thing to do, but the American people deserve it!  Every opportunity for free-market solutions should be taken.  Toward this end, corporations play an important role.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by

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