The biggest problem American companies and probably every other corporate-level business in the world has is that few of them, if any, understand that there can indeed be too much of a good thing, or at least too much trying to obtain too much of a good thing, especially when that “good thing” happens to be increased revenues or profits or increased CEO and high-level executive compensation. Revenue and profit have become such a dominating target that almost none of their CEOs or corporate boards ask, “How much is enough?” Those that do ask invariably answer, “As much as we can get.”
I’m not against profit, just as I’m not against eating, but trying to gorge on profits is the corporate equivalent of gluttony, and sooner or later it results in either corporate unwellness, terminal corporate illness, or societal malfunctioning on a grand scale. Corporations are continually trying to do more with less, in order to increase revenues and profits, but none of them ask what the results of their “success” will be, or the implications for the future.
The other day I went to get a plastic pipe joint for my sprinkler system – just a piece of PVC pipe maybe five inches long at most. When I got home I discovered I actually had an unused one, but I thought they were different. They were. The new one was almost an inch shorter than the older one, which means that it’s not as strong. I suppose it doesn’t make that much difference for a buried sprinkler system pipe, but the problem is that making things smaller and cheaper while selling them for the same price or even more doesn’t stop at PVC pipe. It goes into things like General Motors car ignition switches, whose failure resulted in people being killed, all for a savings of a dollar a car. And the only lesson Detroit has learned since the Pinto fuel tank disasters is that people eventually forget.
The problem with doing more with less and maximizing profits is that the goods and services are cheaper, that fewer employees have good paying jobs, and the profits go to those already well-off, either through dividends, capital gains, or higher compensation. All that makes executives happy and well-paid, and investors equally happy – but only for the moment. The problem is that ninety-five percent of Americans (and before long it’s likely to be 99.5%, it isn’t already) aren’t sharing in this wealth, and, as I’ve noted before, in a consumption driven economy that also imports more than it exports, as income inequality increases, the ninety percent have less and less to spend, and that means that they buy less and they buy cheaper goods. It also means that welfare and food stamp program costs go up, yet with tax revenues already in deficit, that means that infrastructure programs have lower funding, as do research, defense, and education, among others necessary for the successful functioning of society.
In effect, the quest for greater revenues at all costs is bankrupting the country, slowly but inexorably. And for what, so the top 25 hedge fund managers can make more money than all the kindergarten teachers in America? So U.S. corporations can outsource more and more jobs? Maybe, just maybe, if the top ½ of one percent of the earners in the United States had to pay taxes at U.S. levels in the 1960s, they might not be so obsessed with profits, and we could pay for the basics society needs without running deficits, and we might get back to 1960s prosperity. And… please… don’t talk about welfare cheats; the biggest cheats are in the finance industry.
But don’t count on any real tax and structure reform happening so long as the Republicans claim that higher taxes are job killers. Higher taxes on the right people aren’t. Tell me, honestly, exactly what benefit do all those exorbitant multi-million dollar compensation packages provide for the country?