Today’s Guest Saturday post comes to us from Pat Slattery of The Free market Project. I was originally published on May 3, 2012.
The Contribution Businesses Make
One of the things that changed my life, and my view of capitalism, was something my father did when I worked for his company. At that time I was still under the sway of my college training and relentless demonization of “corporations” in the media and by Democrats in particular. It seemed the bad guys were always businessmen.
A short history (which I only appreciated fully after I took my blinders off): My father started a company (publicly traded) when I was a little kid. The company was successful, due mostly to his hard work and vision. It wasn’t an Apple Computer, by any stretch of the imagination, but it was a profitable small business that provided needed products for industry, made money for investors, and employed about fifty people. (If you read my book, The Tamarack Conspiracy, the company and characters I describe are taken from the real thing).
On a bit of a lark, partially in reaction to some politician talking down business, my dad gave the comptroller of the company an assignment. He wanted to know how much the little company he’d started had contributed to society, forgetting the value of the products to the consumers, but just looking at the taxes collected by the federal, state, and local governments. To do this, you need to look at corporate income tax (paid to the feds and state), but also the taxes paid by the employees (who couldn’t pay those taxes without those jobs), also including the FICA, and the property taxes paid locally. The comptroller couldn’t figure out a way to estimate sales taxes paid by employees for purchases that would be accurate (purchases made possible by the employees having a job that gave them pay that allowed them to make purchases), or how to estimate gasoline taxes paid (again, as a result of people having a job that gave them pay that enabled them to drive), or what the property taxes paid by employees owning their homes (as a result of, etc. etc.) amounted to. Those items were extra, but also made possible by the company being successful enough to hire people, and pay them a good wage.
The existence of this relatively small, fairly successful company, over time, had contributed many millions of dollars to society (if you define society as governments). It had also supported communities with donations both to charities and community activities such as sponsoring baseball teams and community projects such as building parks.
The business was not built for greed, by the way. It was built for love. My dad loved the product he’d invented that started the company. He’d seen a problem and he figured out a way to solve it. He loved the freedom of working in his own company (though, as CEO, he really worked for his shareholders, customers, and even his employees… something most people don’t really understand who have never owned a business). He really loved his employees, and they loved him back. Nobody was happier than my father when an employee was able, because of their job in my dad’s company, to get married, or buy a house, or even purchase a cabin on a lake. I believe this is true of most entrepreneurs. Sure, they want to get paid, but they want to get paid as a result of having done something worthy, having contributed to people’s lives with their product or service, and the money is simply the acknowledgement of their success at having made that contribution.
My point, however, is the millions of dollars that rolled out of that small company that paid for government at all levels. Businesses make government possible. They not only create wealth in the private sector, but they are the only vehicle for producing the wealth consumed by government. Anything good government can do can only be done because of the businesses that are creating the wealth. This is obvious to anyone who would read this blog, because I assume my readers understand free market capitalism and wealth creation. But there are people, one of whom occupies the White House, who don’t seem to understand this simple concept. Harm businesses and you harm everything.
An aside: One day I was sitting on the dock at our family’s cabin, fishing (when I was in my early twenties my dad was finally getting paid enough so that he could afford a vacation home–something VERY common in Minnesota and the rest of the upper midwest). I was watching the clouds and it suddenly occurred to me that the way water was transported by nature–oceans and lakes, evaporation, condensation into clouds, clouds roaming over the land, rain and snowfall, rivers taking the water back to the oceans–was an incredibly efficient system. It is a beautiful design, really.
Back to business: Harming businesses (with taxes, regulations, cronyism, creating a business unfriendly environment in general) is like figuring out a way to destroy clouds and then wondering why there’s a drought.
My father’s little company (still going, by the way, even after his death–I don’t work there though) contributed many millions of dollars to society. In my post yesterday I called your attention to a PJTV episode of Trifecta in which Bill Whittle talked about the same thing regarding a huge company, the richest company in the world at this moment, Apple Computer, which was apparently accused of not paying it’s fair share of taxes. How many billions do you suppose Apple Computer could account for over time if it did my father’s little experiment and tallied all of the tax revenue generated not only through corporate income tax, but also the taxes collected because of the jobs it provided, and the property taxes it paid? From the smallest mom and pop operation, to companies like my father’s, to Apple Computer, the contribution of business is… Well, it’s the only contribution there is. That’s the bottom line.
Where else is government at any level going to get money? No businesses, no jobs, no taxes collected, no government. Why don’t leftist, statists understand this? Rather than appreciating the miraculous efficiency of evaporation and cloud formation and precipitation and rivers, they’re cursing the clouds and trying to destroy them.