Wednesday, September 19, 2012

The invisible hand of the market.

"If the only tool in your tool box is a hammer, then every problem you encounter better be a nail!" I would like to start out by saying I am NOT anti-corporatism. I think for some applications, the corporate model should be applied because of the efficiency of scale it provides. Some systems do benefit from top down control in ways that can act to benefit consumers. It is when that model is applied outside of its useful range that it becomes by magnitudes more harmful than beneficial.

In my opinion, two things limit the range of applications where the corporate model can be applied. One is the way in which consumer choice can be inherently protected. The second, is the purpose of the system being studied.

Despite the charter of any company, the end goal of any business is to make money. It is the single driving force behind the vast majority of boardroom decisions. It all comes down to money. When consumer choice is not protected and a good or service is compulsory, health care for example, regulation must be tightly maintained to prevent the decision making process to allow services to sink to lowest common denominator. Decisions that are detrimental to the public good become "necessary to the bottom line". That puts those profiting from the system exactly at odds with the interests of the consumer. This is one of the most strikingly obvious examples of where the corporate model is entirely incompetent.

Another question that should have been asked before allowing the private sector to apply a corporate model is "What is the purpose and role of this system?". Education for example is a way for a country to invest in its own future. Education is the only thing keeping any nation from slipping back into the dark ages. This is not something that pays off with forth quarter dividends. It is altruistic, it leads to greater personal investment by individuals who a part of a nation. It prevents the kind of desperation that spikes crime rates and lifts people from the need of social welfare safety nets. Again, constraining a system intended for public good to become profitable places the system at odds with the consumers.

Today, this highly successful model from the competitive private sector is being applied to systems where no competition exists. It is leaching into governance where its essentially psychopathic nature will eventually become the single greatest threat to our national security. The model of corporatism has proven to struggle under regulation and will do everything it can to shirk its control. If individual businesses can not be trusted to act in the best interest of important yet unprofitable components like environmental protection, how can we trust them to strive for the best for our nation?

The answer is, we cannot.

As always, I welcome you comments and will not edit or omit any.

2 comments:

  1. So, we either regulate corporations into having a conscious beyond the fiscal bottom line, or we find another model which may not have the immediate efficiency of the corporate model, but have demonstrable long term efficiency for people. so, do we force "people before profit" or do we somehow show that it can be "profitable" to put people first over the long term?

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  2. I think certain sections of the current economy need to be reexamined. For instance, would making all health care related licences only available under non-profit organization regulations improve things?

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