What Comes Around?

Complaints about constraints on doing business are rife with taxes, regulation, red tape and labour unions high on the list. Businesses may face constraints on hours of operation, location, waste stream, supply chain, manufacturing processes, noise, smell, unsightliness issues and, of course all manner of labour regulations regarding hiring, firing, salaries, benefits, pensions, working hours, breaks, and workplace safety. Why all the regulations? The regulations exist because of the long litany of bad behaviour on the part of a segment of the business community, overworking, underpaying, absconding with the cash register, failing to consider the safety and well-being of employees and clientèle, sending toxic waste directly into the waste stream without treatment, faulty storage of chemicals and toxic materials, harassment, assaults, situating business such that they infringe on the ability of the community to carry on without nuisance: every time some of these people get out of line, government seems to be the only recourse and we end up with more red tape and more regulation. Of course there are businesses that get around much of this by manufacturing in low-standards jurisdictions where environmental and labour standards allow the manufacturer to operate without regulation. Isn’t it interesting to note that in those jurisdictions, business tends to seek the lowest common denominator, to so the least they possibly can so as to maximize profits. Some of this may be due to laws on the books that state that the business may have no other concern than to generate profits for shareholders, but even privately held companies tend to hew to the same line, perhaps because they have to compete with the publicly held outfits, perhaps because it fits their view of what constitutes a sound business plan. When we tack on poor quality, lack of workmanship and planned obsolescence, and then export the goods back into our own jurisdiction where the lowest price seems to be the most important consideration, then there are profits, but the people who made the mess don’t seem to bear any responsibility for cleaning it up, for finding additional space in landfills for the shoddy goods they’ve brought on shore or for the people put out of work because of a tilted labour market (see the previous post about RBC and offshoring). Then there are the convoluted and sometimes outright fraudulent schemes concocted to avoid taxes, funds that ought rightly be used to provide health, education, infrastructure, policing, fire protection, bylaw enforcement and diplomatic services, but which end up in offshore accounts, The executive suite has also been an inordinate beneficiary of the gains built on externalities and junk economics: J.K. Galbraith famously quipped: “The salary of the chief executive of a large corporation is not a market award for achievement.  It is frequently in the nature of a warm, personal gesture by the individual to himself.” Should we wonder, then, that there be a clamour for something to inhibit the victimization of citizens by the investor group? What?, you say, we won’t be able to produce anything if we keep all these rules and forbid the waste, planned obsolescence, exploitation of labour, and the ability to externalize whatever interferes with the profits. True, and it probably means that we can’t go on changing electronic devices every six months, our wardrobe every season of every year, our home decor at a whim and kids toys on a daily basis. Fewer, truly durable goods, easily repaired in case of failure, manufactured with all byproducts recycled and without toxic material let loose manufactured by people as close to market as possible and by workers well enough paid to exist comfortably in society. When greed ceases to be the motivating factor in society’s business, we’ll need fewer protections and will be able to simplify our code of legal protections. Please, let’s have less griping and moe constructive moving to a real economy.