Jun 30, 2019

Big business is not the ogre we fear — it can be a force for good

written by Lisa Eason

I have always preferred smaller, growth companies to big business. To me they have more character, more potential and they feel more alive. I accept that some of this bias is irrational, and I would still much rather have more big business than more big government.

An instructive new book on this topic is Tyler Cowen’s Big Business. It carries the subtitle A Love Letter to an American Anti-Hero — in essence, it is a defence of the large corporation against its many critics.

Industry needs the support — a Gallup poll carried out in 2016 suggested that while 38% of Americans trust small business “quite a lot”, only 12% feel the same way about big business. Yet, historically, the United States has been a highly pro-business country.

Who is most suspicious of big business? Media outlets of all kinds give disproportionate coverage to scandals, corruption and failures in the business world. Sadly, positive stories about day-to-day progress, incremental innovation or steady job creation do not tend to make the headlines. Young people have a more cynical attitude to big business than older generations. This is somewhat surprising given the addiction of millennials to tech and social media, which is dominated by corporate giants such as Google and Facebook.

I fear the proliferation of university education among this generation has fed a negative mindset towards commerce, since most academics are left-wing — and too many of them lack direct experience of the private sector.

It is a shame that their fervent belief in diversity and inclusion doesn’t extend to ideological diversity. The sooner more students start to embrace practical apprenticeships — rather than mediocre three-year degrees — the better, not only for their own job prospects, but also the nation’s prosperity.

Cowen’s book tries to itemise the main complaints about big business, and deal with them in turn. So he asks if business is essentially dishonest; if chief executives are paid too much; if companies are too short-term in their plans; if companies treat staff badly; if business is becoming ever more monopolistic; if the tech giants are evil; if the finance industry is bad for society; and if crony capitalism is widespread.

The book provides sensible replies to all these accusations. He argues that, generally, large companies are at least as honest as citizens; that chief executive pay models are mostly effective; that business is pretty long-term in its horizons; that staff in big business are increasingly well protected; that there are very few true monopolies — and most are thanks to government regulations; and that both the tech and finance industries enhance our lives.

The author entitles his final chapter If Business is So Good, Why is it So Disliked? This is the most important question of all. Business is unquestionably an irreplaceable force for good. It creates jobs, it innovates, it builds infrastructure, it pays enormous amounts of taxes, it produces the products and services we rely upon every day of our lives. However, we hold endless conspiracy theories about it: we imagine sinister intent where there is none; we look for blame when things go wrong. In truth, we depend on business so much, it is perhaps not surprising that we resent it. It is much easier to hate big, faceless corporations than a local company with more human dimensions. An impersonal multinational, headquartered in some distant place, run by apparently greedy bosses, is a soft target for criticism.

Some of the time companies only have themselves to blame if consumers attack them. We have allowed the public to hold impossible expectations. We expect companies to supply miracle products or provide impeccable service, even when this is unreasonable. Moreover, companies use marketing to tug at our emotions, and want staff to exhibit high levels of loyalty.

Unsurprisingly, customers and staff can enter into a relationship with a company full of false hopes — we anthropomorphise them.

Ultimately, a business is an abstract legal entity established to generate profits, but that truth fits poorly with modern ideas of corporate social responsibility — and doesn’t sell well. Hence companies increasingly pretend that they are passionate about something or other — and incredibly responsive towards their customers.

Companies can often reflect the broader limitations and flaws of human nature. As the Bible says, all have sinned and fall short.