I’m passionate about a lot of things and sometimes I get inspired to write about things that aren’t related to photography, video, or technology. One topic that has bothered me in recent years is corporate greed. Don’t get me wrong, it’s also not feasible to give everything away. In fact, a recent statistic I saw indicated that evenly distributing the world’s wealth among every person would leave each person with $2,000. That’s not a lot of money. However, continuously collecting the world’s wealth will eventually lead to an economic crisis.
My perception of the corporate world has long been that many major corporations and the top 1% of the wealthiest people in the world only care about the bottom line. Their actions and mindset is making money and doing whatever it takes to make the most money. I tried to keep this perception as just an idea in my head. Perhaps this was a biased opinion I learned from my environment. Then I attended college for the second time to earn a second bachelor’s degree. I started in Business Administration to learn more about running a business and management. The teachings revealed truth in my perception, that everything a company does is for the gain of the stakeholders.
Stakeholders in my teachings are the company, board of trustees if one exists, management, shareholders, etc. Stakeholders wasn’t discussed as the customers, but they’re stakeholders too. A stakeholder is anyone affected by a project, company, decision, etc. In business, you’re taught that the decisions made should benefit those profiting from it. There’s no care for those that might be on the other end of this. When I challenged this thought process, I was usually responded to with agreement, but offered little more attention. I don’t blame the school or instructors, it’s just the nature of the industry and culture.
Here’s the problem: If corporations continually play survival of the fittest and the wealthy keep collecting money as if they might need it one day, we will eventually be left with an economy of few companies, likely monopolies, and a customer base that can’t afford to do business with those companies. Let’s examine the idea of few companies first.
In a truly free market, one without restrictions or regulations, corporate mergers and unfair schemes or business practices are allowed to occur. Fortunately, we have some restrictions and regulations with the intention of protecting customers from unfair practices and monopolies that can strong arm an industry. Yet corporations still find ways to form monopolies or oligopolies and invent new and unfair practices. As these companies game the system to become bigger, better, and stronger in the market, the competition has to get smaller and weaker. There is a finite amount of wealth in any economy and a finite number of customers. While one company wins, the rest must lose. There are other factors at play and it’s much more complex than that. For instance, having a variety of products spreads out the risk and opportunities for revenue, making it a much more even playing field.
Let’s look at the telecommunications industry. Some of us might remember how home phone companies had merged so often that they had eventually become an industry of few very large and powerful companies. There was little competition and costs were high. The federal government had to break them up, which lead to reduced rates for long distance, then the eventual elimination of local long distance rates and cheaper calling plans. This might also have contributed to the current emergence of customer-friendly VoIP services competing in the market.
In the cable and internet service industry, we’re seeing a lot of the same as the phone industry. Most regions have one or two providers and none of them compete with one another very well. Most of us play a game of going back and forth between them to get the introductory offers, which are still expensive but it’s the cheapest option. Those of us cutting cable to rely on streaming are being strong armed with data caps, punishing us for cutting cable from our bills. To make things worse, we’re seeing many merges, or at least interest in merges, occur in this industry, providing customers with less choice and less competition. Even today, we’re at the mercy of our internet providers and must pay what they ask. Finding another option is not an option for most of us.
Back to the topic of money. We are now seeing one of the largest divides on wealth in US history and this is downplayed completely. The wealthy keep getting wealthier and the poor find it more and more difficult to rise above poverty. As we as consumers give our hard earned money to the companies that provide us with goods and services, we have less money in our pockets. We work to earn our money, but are we getting back what we’ve spent? Money is a limited commodity. Yes, the government can print more, but that just reduces the value of the money — supply and demand. If corporations are reporting large profits, then we can assume that the money they earned came from us and isn’t being redistributed back into the economy. As the wealthy gain in wealth, keep in mind that wealth is coming from their customers. As the wealth moves from one person to another, but doesn’t eventually move back, then less money is in the economy to be able to buy goods and services from.
When the economy is faced with few companies that can demand whatever they want due to a lack of competition and the customers have little or no money to acquire those goods and services, then those companies have no more money to collect. One of two things must happen, stop selling or reduce price. Even if price is reduced and the customer has no money, nothing can be bought. Eventually, the wealthy will be in an economy of themselves while the rest of us are forced to scavenge. This is an extreme vision and economic behaviors generally prevent things from getting this bad, but it’s something to keep in mind.
Every company’s best interest is to ensure their customer can purchase their product. The customer should come before the shareholders. The customer is the employee, not the investor. By providing a living wage, economic growth can occur. By enabling competition, innovation is pushed, which leads to job growth. Rather than teaching that we, as businessmen and businesswomen, must make decisions that solely benefit the company profits, we must look at the bigger picture and into the future. A decision that increases profits today may be that step towards economic disaster 5 or 10 years in the future. We saw this first-hand with the housing market crash in 2008. Let us learn from this mistake and think outside the company. This will require a cultural change to be successful, but as a younger generation moves into these roles, we can hope new ideas come with them.