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The biggest “corporate power”

Mark Poyar | Tuesday, March 18, 2008

Elections inevitably bring out the worst in those running for office. Rather than engage in reasoned debate, they make baseless claims cloaked in lofty rhetoric in an effort to appeal to their potential voters.

One such popular delusion frequently cited by politicians is that businesses are somehow inherently evil. This view sees the interests of the worker and of the business as diametrically opposed and irreconcilable. Businesses wield an unacceptable amount of power: they can refuse to provide health care, they can lay off employees at their discretion, and they can exploit their employees by underpaying them. They can do virtually anything. In short, “corporate power” is eating America’s sustenance.

Such an argument misses the voluntary nature of the free market. Businesses have no “power” to force anyone to do anything. I may not like Big Macs, but Ronald McDonald cannot speed up my bowel movements unless I choose to buy his product.

I might hate Windows Vista in the same way everyone hates herpes, but Bill Gates can’t force me to buy his product. The only way that any business can succeed is by satisfying the tastes of its customers better than its peers. It must interact with consumers on a voluntary basis to persuade them to part with their hard-earned cash (unless it steals from the tax-payers through subsidies and other government handouts).

Similarly, a business deals with its employees in the same voluntary manner. When a company extends an offer to a potential employee, the firm agrees to give some sort of fixed compensation to the potential employee in return for his or her services. The employee can choose to either accept or reject the offer. The company cannot force the potential employee to work against his will under terms he did not accept. It can only hope the potential employee will choose to accept the offer. Either party can choose to end the business relationship if the relationship ceases to be mutually beneficial.

The relationship between consumer and firm or employee and firm is not inherently conflicted, but mutually beneficial. No consumer is forced to buy a Dell laptop; rather, the consumer chooses to do so. The act of choosing to exchange his cash for the laptop means that he personally valued the laptop more than he valued his cash or the trade would not have occurred. On the other side, the firm must have valued his cash more than the laptop or the trade for the same reason.

The same is true for employees and employers. The employee would not agree to work at a firm in exchange for compensation unless he valued the compensation more than the disutility he gets from working. The employer would not agree to employ the worker unless he gains more from employing him than he loses through the wages he pays. Obviously, both parties to the transaction benefit, not just one at the expense of the other. Business is not a zero sum game.

It is amusing that those who rally against the evils of “corporate power” somehow see the federal government as the cure rather than a disease. Whereas businesses get their “power” through voluntary interaction with consumers and employees, the federal government behaves in the opposite fashion. The government is naked force. It can spy on its citizens without their knowledge. It can prohibit its citizens from eating certain types of food. It can prevent its citizens from engaging in mutually beneficial exchanges.

Many adult Americans are forced to work for nearly free 5 months of the year so that the government can take their money and give it to someone else to whom it does not belong (old people, poor people, medical care for others, etc.). Citizens become de facto slave labor to the government.

Which is more dangerous: an entity that can arbitrarily seize 40 percent of a person’s income, restrict a person’s freedom, and spy without any restrictions or an entity cannot force you to work for it, buy its products or have any relationship with it? Any person that believes in the benevolence of the former and the wickedness of the latter should probably seek counseling. Unfortunately, the entire political establishment needs counseling.

Mark Poyar is a senior finance major and vice president of the College Libertarians. Their Web site is http://ndlibertarians.blogspot.com. He can be contacted at [email protected]

The views expressed in this column are those of the author and not

necessarily those of The Observer.