A question for you: What is the primary objective of a company in America?
According to a recent Rasmussen survey, two-thirds of us believe it is to create jobs for the overall economy. Only 25 percent of us believe it is to create value for the owners.
Another question for you: Suppose you open a restaurant. You employ six people. One morning you find demonstrators on your doorstep. They flaunt placards. They jeer at you. “Hire more workers!” they cry. “Create more waitress jobs!” they insist. “Live up to your responsibility.”
How do you suppose you would react?
Most Americans would tell the demonstrators to stuff it. Why then do we think differently toward companies? My guess is that as a restaurant owner you would look out for yourself. You would not add waitresses to salve your conscience. You would not add a cook because lots of cooks are out of work.
Instead, you would do what works best for your business. That is what companies large and small do. That is what six-person restaurants do. And what one-person newsstands do. Why then do so many Americans feel companies should strive to create jobs?
Well, a lot of politicians and media types encourage folks to feel this way. The President does. He chides businesses for not creating more jobs.
Sorry, but this makes no sense. I don’t wish the President had had some experience in business. But if he had, he might think differently.
It is not the responsibility of business to create jobs. Never will be. Never has been. Except in heavily socialist countries. In them, governments forced companies to keep unprofitable plants open. Forced them to create make-believe jobs. Until the companies failed. Which inevitably happened.
Communist countries (and many socialist ones) loved to create jobs. For the sake of creating jobs. This worked in the short term. And flopped in the long term.
The bureaucrats and politicians find it easy to create jobs. Everything is easy when you use taxpayer money. You don’t have to show that you use it wisely. You don’t have to make a profit with it. You pay no penalty and feel no pain when you lose it. How many politicians lose their jobs because Amtrak bleeds money? Taxpayer money. How many see their next eggs and pensions vanish when they lavish millions of taxpayer money on “green” ventures that flop?
When you use your own money, the rules change. They had better, or you will lose your money fast. When you use stockholder money, the rules change.
Look at the greatest job creators in business history. The Microsofts and Googles and Apples of today. The Ford Motors, GMs, IBMs and Kodaks of yesterday. If you pored over every inch of their records you would never find a word about them feeling obliged to create jobs.
They felt obliged to create and market products and services people wanted. They felt obliged to survive as companies. They felt obliged to make profits from their efforts. And to provide decent returns to their investors.
By meeting those obligations they created jobs galore. And if you run your restaurant for the benefit of your customers and yourself, you will create more jobs too.
Go ahead. Believe it is the duty of companies to create jobs. Nobody can stop you. If you do, however, I suggest you file that belief in the fairy tales section of your mental library.
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.