# Business's exist to make a profit, not to create jobs. **URL:** \ **Category:** Great Debates\ **Created:** [September 6, 2010, 1:43pm UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789 "2010-09-06T13:43:42Z")\ **Posts on this page:** 6\ **Page:** 5
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [September 11, 2010, 11:14am UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/81 "2010-09-11T11:14:22Z")
> [@Starving\_Artist](#): > > > [@davidm](#): > > > > However, as an afterthought I will add that CEOs getting million or billion dollar bonuses regardless of performance is not excusable and is not explainable as a business necessity. > > No offense intended, but what business is it of yours - or of anyone other than the stockholders of the company itself - what a company’s CEO is paid, or under what conditions? > > What you seem to be suggesting when you say that large bonuses in light of poor performance is inexcusable, is that government should somehow be stepping in to keep CEO salaries contained within certain government-set boundaries, and in my opinion it would be outside the proper role of government to begin to meddle in, and try to set compensation policies, for private business. I would view it as one more step in the direction of private enterprise being taken over by the government, and history is replete with the misery that results when government controls the means of production. Please point out the word “government” in my post. Saying that it’s wrong and doesn’t make good business sense is simply pointing out the obvious, beyond that you’re putting words in my mouth. Do you think that people should get large bonuses for poor performance? Do you think that it’s wrong to point out problems simply because the only solutions _you_ can see involve government? ---
**Author:** ![Acid\_Lamp](https://avatars.discourse-cdn.com/v4/letter/a/d6d6ee/32.png) [@Acid\_Lamp](https://boards.straightdope.com/u/Acid_Lamp)\ **Post date:** [September 11, 2010, 12:24pm UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/82 "2010-09-11T12:24:34Z")
> [@Sage\_Rat](#): > > > [@foolsguinea](#): > > > > Wow. Seriously, dude, go find some actual Democrats, start a conversation, & listen. That is not the typical liberal opinion at all. > > Going from the SDMB at least, SA’s statement there seems pretty damn spot on. I can only imagine that less intellectual Democrats than those on the SDMB are even worse. Actually a lot of liberals are antagonistic to large corporate businesses, not business in general. I understand that to be as dynamic as possible business needs to have as little restraints as possible barring productivity. As someone who cares about more than my own pocket, I understand that clear, well enforced regulation is the only thing that will prevent the sort of abuse of power that has gotten us into this mess. Generally speaking, small businesses do not operate on the same financial model as corporate entities. Bob’s Tractor repair will probably do whatever they can to cut expenses before cutting payroll on their small pool of employees. It would not be unusual for them to rise and fall with the times, cutting back on inventory that doesn’t move as fast, etc and simply not doing as well this year as last. When all else fails, they’ll cut payroll to survive, not profit. Bob works this way because he knows that when he lays off people he’s taking food off their family table,\* they are dependent upon him and his company for their income. \* Bob knows that not everyone can be a chief, we need a lot of indians too, and the chief has to look out for his tribe. That’s why he gets to make all the decisions and gets the highest pay. Monster Tractor Inc. on the other hand cares about the bottom line and nothing else. They command enough of the market share to bully suppliers and have driven out a lot of small time shops, making them the only game in town. They have competition, but it’s not really something that affects them personally. It just affects their customers in Tractorville. If things get tight, their shareholders don’t care, they don’t work there. They just want their money. That is easiest to accomplish by cutting payroll. They could find it elsewhere by being creative, but laying off employees is the simplest measure. A responsible CEO, and their executive staff would forgo huge rewards during such times and plug them back into the system to help out. They don’t though. Often because they have the legal right to them written into their contracts regardless of performance. Sometimes because they are greedy. Sometimes because they think they deserve it. Tighter regulation like eliminating the legality of mandated bonuses, golden parachutes, etc, isn’t about sticking it to The Man; it is about ensuring that such entities act responsibly if we are going to allow business to assume a huge place of responsibility in our economy, supply chain, and health care industry. Reform is long overdue, and Americans have long enjoyed a grossly inflated standard of living. What we need is a cultural adjustment to a slower, more stable, less risky economic model that rewards playing by the rules rather than profiteering at any cost. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [September 11, 2010, 1:15pm UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/83 "2010-09-11T13:15:58Z")
> [@davidm](#): > > > [@IdahoMauleMan](#): > > > > This is clearly wrong. And I’ll repeat what I said in my earlier post…that people who believe as you do above have obviously not ever had P&L or revenue responsibility, or have ever had to hire/fire a large number of people in response to real-world market conditions. > > > > A business does best when it has _the most valuable_ employment expenses possible, not necessarily the least. And by most valuable, I mean the expenses that create the highest risk-adjusted return… > > Which is what I was trying to say with my caveat: > “more accurately, spending the least it can for the most productive activity”. > > I still don’t think that I’m so clearly wrong. Companies start outsourcing, for example. Others have to outsource in order to compete, and pretty soon you lose a lot of well paid production jobs, everybody’s working in lower paying service industries, and you have no customers left (at least not after their credit runs out). So you have to cut back even more simply to stay in business, etc. > > I’m not blaming businesses for this. I’m not saying that more heavy handed government solutions will solve anything. I don’t know what the answer is. Unfortunately, I’m not convinced there even are any good solutions. But just because we don’t like the solutions proposed so far or don’t think there are solutions doesn’t mean that the problem doesn’t exist. Thanks for the post. And I’m sorry to repeat it…but yes, you are clearly wrong. You, Acid Lamp and others seem to think that business decision-making is a one-way street, with no checks, balances or feedback loops that force course-corrections along the way and provide information. You apparently don’t know that there are things called ‘customers’, who provide the revenue and ultimate control over the success or failure of a business. Here are some of yours (and others) quotes “Companies start outsourcing…and others outsource to compete” “Monster tractor bullies their suppliers…and drive others out of business” Quotes like that and other snippets only reinforce the notion that you don’t know what you’re talking about. Customers ultimately decide who wins and loses. Businesses don’t. It isn’t a one-way street of decision-making where a business goes around and decides to ‘screw employees’ or ‘cut costs to the bone’ or ‘outsource’ everything and there are no consequences to the decision. Monster tractors doesn’t just ‘bully suppliers…and drive others out of business’. How could such a thing be possible? A business doesn’t just wake up one morning and decide it’s going to ‘drive others’ out of business. A voluntary transaction needs to occur between a customer and a business for anything to happen. The business is only one side of that equation. You know who has my business by the balls right now? One of my suppliers. We had a complicated and expensive piece of componentry fail on us a few weeks ago that has taken a bunch of productive capacity offline. It’s 12 weeks, minimum, for a replacement to arrive from Germany. First they said 8 weeks…now it’s 12. There’s not a whole lot I can do, because they are essentially a sole supplier. Shame on us for not planning better, but we had to weigh the cost of buying (and holding) an expensive spare against the risk of failure. The complexity of properly planning for that is one of the reasons why I need to hire the six-figure professional I describe above. There are other examples like that. I can’t just ‘outsource’ all of customer service, because you invariably lose some expertise and quality when you do that. I need to weigh that factor against the potential savings. I don’t have unilateral power to bully this supplier, or screw that person, or lay off those people over there, because ultimately my customers will decide how successful I’ll be and if I’m no good, they will go somewhere else. So…why do so many people think the way you and Acid Lamp do? I’ll posit an opinion, and it’s the same thing I’ve repeated a billion times ad naseum on this Board when Sam Stone and I (and perhaps Shodan, Scylla and a few other voices in the wilderness) argue against the leftward-leaning tilt. You folks think you’re victims. You think you’re helpless peons, twisting in the wind against the evil, powerful forces of The Man. Wal-Mart is trying to screw you, their employees, and everybody else. Or Big Oil. Or Big Pharma. Or Der Trihs’ theoretical lawn-mower company in the classic Libertarian/Fringe thread, where he claims they must be deliberately loosening lawn-mower blades in the corporate boardroom to try and kill their customers. There are evil, nefarious no-goods everywhere who’s intentions are to be mean and cruel to you, club baby harp seals, and dump whatever toxic chemical they have in their smelly, smoke-stack factories into their own back yards. Only the savior of government - President Obama, Nancy Pelosi, or someone else -will come and protect you from these Forces of Darkness. You’re not victims. You have all the power. That is, if you don’t sign it away to someone in Washington, D.C. who will gladly take it from you, if offered. If you are anxious to trade your liberty for security, you will get neither. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 11, 2010, 1:19pm UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/84 "2010-09-11T13:19:31Z")
> [@Acid\_Lamp](#): > > Generally speaking, small businesses do not operate on the same financial model as corporate entities. Bob’s Tractor repair will probably do whatever they can to cut expenses before cutting payroll on their small pool of employees. Speaking as someone who actually works with a lot of small businesses, this strikes me as being so divorced from reality I cannot believe someone would actually write it. ---
**Author:** ![Acid\_Lamp](https://avatars.discourse-cdn.com/v4/letter/a/d6d6ee/32.png) [@Acid\_Lamp](https://boards.straightdope.com/u/Acid_Lamp)\ **Post date:** [September 11, 2010, 2:31pm UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/85 "2010-09-11T14:31:45Z")
Then that’s why they are failing. I’ve co owned a successful small business, and operated in that manner, as did just about everyone else in my local SBA. You cut other costs before payroll, that is the responsible thing to do. I needed my employees to help with daily tasks. The savings of cutting them wasn’t worth the extra hours of work on my part. If we got busy who would help customers? Who would mind the register while I was assisting others? You can cut deadweight, but if you are small you don’t hire it in the first place. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 13, 2010, 4:11am UTC](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789/86 "2010-09-13T04:11:13Z")
> [@Acid\_Lamp](#): > > Then that’s why they are failing. What about the ones that aren’t? Sorry, but the logic you’re applying to small businesses applies to medium and large ones, too. I’ve seen lots of small businesses cut back from 15 employees to 12, from 10 to 6, from 30 to 16 (I am not making up these numbers, these are specific examples I’m thinking of), from 9 to 7, stuff like that. If the work simply isn’t there for 8 machinists, sometimes the logical thing to do is to let one or two go. I don’t know many small businesses that have any other bloated costs that could be easily cut… what’re they supposed to do, stop paying the rent? [Previous page](https://boards.straightdope.com/t/businesss-exist-to-make-a-profit-not-to-create-jobs/552789.md?page=4)