Corporations Don't Owe You Anything

Corporations Don't Owe You Anything
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There is a difference between entrepreneurs and politicians. Entrepreneurs are willing to risk it all in pursuit of a dream or an idea that produces real value for society while politicians merely whine about entrepreneurs. Entrepreneurs put what they have on the line and then devote the blood, sweat, and tears necessary to grow their business. However, the mantra of the political left and recently some of the right is that corporations owe us. They owe us better pay, they owe us better service, they owe us cheaper prices. Entrepreneurs don’t owe us anything.

Of course there is a minimum wage and there are corporate taxes, but neither of these should exist or help the people they are intended to help. In fact, Larry Kotlikoff, a top economist who arguably falls on the political left believes that corporate taxes are largely paid by labor.   

An example of this defeatist attitude is included at the beginning of a recent article by Senator Sherrod Brown. In the article Sen. Brown complains that, “Corporations refuse to pay their workers enough to pay their bills, and big banks won’t make small dollar loans to help people with small dollar expenses…”

This defeatism and lack of understanding of how business works, and why banks issue loans, is just mind boggling. First, no corporation goes into random peoples houses and forces them to work. People choose to work for the wage they are offered. If a company can’t find enough workers at a given wage, they will raise the wage. In fact, Amazon, one of the biggest corporations, now has an internal minimum wage that is nearly twice that of the federal minimum wage. And, when it comes to banks making small dollar loans, it is a completely different market. This is like being angry that the grocery store doesn’t sell cars.

There is nothing wrong with believing that people should make more money — or that a product could be better. But that is when an entrepreneur’s brain starts working — while the political class merely complains. Complaining doesn’t solve problems — entrepreneurs do!

Unfortunately, the political class’s speechifying isn’t their end goal, they almost always follow it up with legislation. In fact, if we continue past Sen. Brown’s introductory whimpering, we see that he is pitching his bill to attack pay-day lenders — or the entrepreneurs filling the market that he says banks have failed. Brown’s gripe is that the rates these lenders charge are too high.

He might be right, but if that is the case, he should start a business supplying this style of loan at a cheaper rate. Solve the problem. There are good reasons not to start a new, low-dollar loan business and that is because issuing such loans is expensive and risky. Sure, each of these companies wants to make money, but they also have other competition in the market.

If a bill like the one that Sherrod Brown has co-sponsored gets passed it doesn’t mean that these corporations will just shrug their shoulders and lower their rates, or that they will just stop giving out the same amount of loans. They will go into a different business. The people that need short term loans will either be forced to go without — or obtain money from individuals that likely charge higher rates, and use much more aggressive collection activities.

As a country we need to stop complaining and start innovating. We need more entrepreneurs. Maybe this should start with politicians resigning and heading out into the private sector to solve problems with their own blood, sweat, tears, and financial risk.

Charles Sauer (@CharlesSauer) is an author and a contributor to many publications. He is the president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.

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