Business Size and Oppressiveness


Here is another of my intermittent attempts at explaining rightish economic views so they appeal to the left.

There is a persistent belief in some circles that big businesses are entirely concerned with profit and exploit poor people in Third World countries to get it. On one hand, this is not completely fair: There are some companies - like 10,000 Villages - that try very hard to help the poor. Other companies start out bad, but reform due to public pressure, as happened to diamond mining with the Kimberley Process. Still others are in businesses where there is no one to exploit. Moving companies come to mind. On the other hand, the original criticism does contain a grain of truth: companies do exist to make money, not to make the world a better place.

Lets imagine that Terry Gou, the new CEO of HARD (my multinational company from last time) decides to open up a giant new factory in India. The new Indian government's policies not only make doing business there easier, but are expected to provide lots of demand for the hot air we produce. Unfortunately, HARD soon encounters a problem. India already has a thriving but inefficient hot air industry and the new HARD superfactory is likely to put many existing manufacturers out of business. This was known and expected. I think the normal business term is "a great opportunity". However, there was an unexpected public outcry (mostly in the West) about HARD destroying small businesses, and thus making India worse off. Given that HARD unabashedly only cares about money, how should it respond?

Typical economic answers would include:
  1. HARD is also providing jobs in is factory
  2. If the same amount of hot air can be produced by fewer people, this frees up labor for other tasks
  3. The reduced costs for the people who purchase the hot air outweigh the reduced income for the producers
  4. Competition drives innovation, making the world (on average) better off
  5. No one is forcing people to use the new hot air or work in the factory; if people choose to, it must be better than what they had before
I want to propose a new justification for HARD:
  1. It is should be, on average, less avaricious than the existing companies. HARD is subject to international scrutiny, and, as its primary market is Western politicians, it has to worry about its image. So HARD is powerful incentives to not be too evil. On the other hand, the competitors are largely unknown, and subject to very little external scrutiny, but the pressure to well as a business is just as strong. They also are more likely to be involved in corruption (which is a problem in India) because they have had longer to make contacts. Thus, while HARD may be a bit oppressive, the people it was replacing were even more so.

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