Suppose you own a one-person business. Perhaps you do. You are a hairdresser. Or maybe a plumber. Or an electrician. Or you repair computers.
And suppose your phone rings tonight. The White House is calling. The President!
He offers small talk until you settle down. Then he gets down to business. Yours. He tells you that you have an obligation to create another job in your business. For the good of the country.
He says you have a responsibility to draw down your savings and invest it in your business. If you don’t have the savings you should borrow money for the investment. And with the new investment in your business you should create at least one new job.
Maybe you will snap to attention and follow the President’s advice. However, if you are like most of us, I suspect you won’t. I suspect that while you may respect your president, you respect your turf even more.
A few weeks ago the President told leaders of the U.S. Chamber of Commerce that they, in business, have an obligation to start creating jobs.
In his weekly radio address the President said businesses “… should set up shop here, and hire our workers, and pay decent wages, and invest in the future of this nation. That’s their obligation.”
Is this any different than him phoning you with the same guilt trip?
Yes, those big businesses may deal with a lot more money than you. And they can borrow a lot more money than you. But whose dime are they operating on? Stockholders’ money.
Do you have a retirement plan? Do you own stock mutual funds? Do you own a variable annuity? If so, there is a good chance you own stock in some of these big companies. They operate on your money.
When the President tells them what to do with their money he is telling them what to do with your money. The money of millions, tens of millions of stockholders, large and small.
Companies have these responsibilities: To do the best they can with shareholders’ money. To do this within the law. To pay workers at least what the law requires. To operate ethically. But they have zero obligation to invest more in this country. They have zero obligation to create jobs.
You may dislike this message. Understandable. But there is a lot of economic history behind it. Many countries have pushed or forced companies to do what government figured was best for the country. The results were usually poor – and a disservice to those who invested in the companies.
With respect to the President, he can talk forever about the responsibilities of business. From Microsoft and General Motors down to you, the hairdresser and your spouse, the house painter. I doubt whether any business owners or executives will ever feel it is their obligation to create jobs.
And I doubt if any of them will ever feel the President, the Congress, or the bureaucrats know better than they do. Not when it comes to how they should invest their money, or run their business.
From Tom ... as in Morgan.
For more columns and for Tom’s radio shows and new TV shows (and to write to Tom): tomasinmorgan.com.