Are Corporations "evil"? Well, by their very make-up - Probably.
This is inspired by a discussion I was a part of on Facebook. The subject was taxes and the left and right weighed in and at one point someone from the right asked someone from the left, "Are corporations evil? They employ people, etc etc."
I had an epiphany.
The very nature of a corporation is our undoing in the end. One of the main reasons, if not THE main reason corporations were created was to put distance between a real person and his/her business. The idea of forming a "corporation" is to keep my personal assets separate from those of my business. That way if something goes wrong, e.g. you fall in my store and break your leg - you can't sue me personally and take my motorcycle. The amount of damage you can do is limited to the assets of the corporation/store. (LLC = Limited Liability Corporation says it all.)
I suggest this very distance, especially when taken to the extreme of large, very large, and mega-corporations is the Achilles heel in the whole deal. Let me boil it down with a real world example.
My wife and I opened a literal "mom and pop" jewelry store in the small town of Lowell, MI almost 9 years ago. About 6 months after we opened a lady named Michelle opened a similar size operation on the other end of our town. Classic story of American competition: we were both after the same market providing essentially the same services: jewelry repair, jewelry design and construction, watches, watch batteries, clock and watch repair, etc.
While we were competitors, things were never ugly between us. We visited each others places of business and knew one another. Julie and I never bad mouthed Michelle and to my knowledge she never said bad things about us. While our products differed, our prices were very similar for key items. We both belonged to the Chamber of Commerce and were involved in the community in various ways. Long story short - Michelle closed her doors a little over two years ago. For a variety of reasons, including some health issues on her part, we came through the "competition" and remained open and Michelle did not. Julie and I are an LLC, but we are so small we have to engage in the community to survive. I have served on a variety of committees, we support local charity, etc etc.
On the other hand, Lowell has a rather large corporation which operates a retail outlet that does it all. Meijer started as a grocery store in Grand Rapids, but has grown into a chain of superstores in MI, OH, and IN. They were once mom and pop, but now are huge by comparison - their fine jewelry and watch department does in excess of 175 million a year in sales: about 700 times what our mom and pop generates.
Is Meijer evil?
I hesitate to label them as such because of the many good things they do in West Michigan. Their jewelry department employs a lot of (part time) people. However, when you look at their jewelry department and their involvement in Lowell, things are not so rosy. The Meijer approach to selling jewelry involves constant "sale" prices which are almost entirely fictional in nature. For instance, I monitored a period last year of 35 weeks and for most of those weeks all the fine jewelry in the store was marked 70% off with one week being 60% off.
If you think about it logically, there is no way short of a going out of business sale that a business could stay alive selling its merchandise for 70% off. NO WAY.
The way they do this is simple. Buy a pair of diamond earrings and assign them a "retail" value of $1,000.00 and have them on "sale" constantly for anywhere from $300 to $400 (60-70% off). The $1,000 price is a straw man - an illusion - they have never sold a pair of these earrings for that kind of money and never will for the simple reason that they are NOT $1,000 worth of diamonds. What they are is a pair of diamonds worth $300 to $400 and they are selling them for their full value. No one who does 175 million a year in sales can really sell anything at 60-70% off day in and day out.
Can you work for 60-70% less than your salary? Week after week after week?
The very distance a corporation provides allows them to do this. I own the business and I am the one across the counter who has to look my fellow human beings in the eye when I sell diamond earrings. I cannot in good conscience represent a $300 pair of earrings as being worth 1k - especially to people that I am engaged with on other levels.
The man or woman in charge of the jewelry department for Corporate Meijer does not have this problem. He or she buys inexpensive jewelry in India and China and assigns it a ridiculously high price and puts it on a never ending sale. He or she has such a distance from the end customer that this all makes sense somehow. It must be good, right? After all, the corporation does 175 million in jewelry and watch sales annually.
Julie and I do not play the mark it up to mark it down game. We might have a special time when our $1k pair of diamond earrings can be bought for $900 or maybe $800 but not very often because we cannot easily give away $100 or $200 out of our pocket in real money.
This is why corporations NEED to be regulated. In spite of my pleas, the Attorney General in Michigan will not do anything to stop what I believe to be deceptive advertising because apparently there is no law prohibiting constant "sale" prices.
Well, you say it is a FREE MARKET - no one has to buy there. True, but you would be surprised at the people who get sucked into believing they are buying $1k in jewelry for $300 when they are actually paying full price for a pair of $300 earrings. It is especially hurtful to watch a young man buying a ring for his sweetheart who thinks his $300 is buying a $1,000 engagement ring, when he is really paying full price for a $300 ring that was mass produced in a way to keep the price and quality very low.
The bigger the corporation gets, the more this type of thing can flourish. When Henrik Meijer started his grocery store, he didn't claim that his ten cent apple was really a 70 cent apple on sale for a dime. He was in immediate contact with his customers and would never have tried to deceive them like that nor would they have believed such rubbish decades ago.
I don't mean to single out Meijers - all the giant retailers do the same thing. I buy a lot of my jeans/pants at J C Penneys. They are ALWAYS on sale in some way, shape or form. I have learned that I am paying the full price for my pants when they are 40 to 50% off or Buy One Get One for a Penny or what ever other "sale" they are having. No one ever pays the full price for one pair of pants and gets nothing else for their money there. If you want to get a headache, read all the fine print on the big SALE flyers from Penneys and Macys - the fine print explains how the "regular" price is not really a price that means anything. A small business could never get away with that kind of malarky. Do you do business with a local bank? Do you sit next to your banker at the Rotary meeting or at Boy Scouts or do your kids play on a team together? Could such a banker sell you a derivative stock? Could he or she look you in the eye and get you to gamble your money on a mortgage made to someone who does not have the ability to repay it?
Probably not, but it is easy for someone hundreds or thousands of miles away to do so behind the screen afforded by corporate distance. The idea of forming a corporation is not bad in and of itself, but when corporations grow beyond the ability of the end consumer to actually look the person in charge in the eye, then things can get out of hand - and they do. Bigger is not always better, in my opinion.
I had an epiphany.
The very nature of a corporation is our undoing in the end. One of the main reasons, if not THE main reason corporations were created was to put distance between a real person and his/her business. The idea of forming a "corporation" is to keep my personal assets separate from those of my business. That way if something goes wrong, e.g. you fall in my store and break your leg - you can't sue me personally and take my motorcycle. The amount of damage you can do is limited to the assets of the corporation/store. (LLC = Limited Liability Corporation says it all.)
I suggest this very distance, especially when taken to the extreme of large, very large, and mega-corporations is the Achilles heel in the whole deal. Let me boil it down with a real world example.
My wife and I opened a literal "mom and pop" jewelry store in the small town of Lowell, MI almost 9 years ago. About 6 months after we opened a lady named Michelle opened a similar size operation on the other end of our town. Classic story of American competition: we were both after the same market providing essentially the same services: jewelry repair, jewelry design and construction, watches, watch batteries, clock and watch repair, etc.
While we were competitors, things were never ugly between us. We visited each others places of business and knew one another. Julie and I never bad mouthed Michelle and to my knowledge she never said bad things about us. While our products differed, our prices were very similar for key items. We both belonged to the Chamber of Commerce and were involved in the community in various ways. Long story short - Michelle closed her doors a little over two years ago. For a variety of reasons, including some health issues on her part, we came through the "competition" and remained open and Michelle did not. Julie and I are an LLC, but we are so small we have to engage in the community to survive. I have served on a variety of committees, we support local charity, etc etc.
On the other hand, Lowell has a rather large corporation which operates a retail outlet that does it all. Meijer started as a grocery store in Grand Rapids, but has grown into a chain of superstores in MI, OH, and IN. They were once mom and pop, but now are huge by comparison - their fine jewelry and watch department does in excess of 175 million a year in sales: about 700 times what our mom and pop generates.
Is Meijer evil?
I hesitate to label them as such because of the many good things they do in West Michigan. Their jewelry department employs a lot of (part time) people. However, when you look at their jewelry department and their involvement in Lowell, things are not so rosy. The Meijer approach to selling jewelry involves constant "sale" prices which are almost entirely fictional in nature. For instance, I monitored a period last year of 35 weeks and for most of those weeks all the fine jewelry in the store was marked 70% off with one week being 60% off.
If you think about it logically, there is no way short of a going out of business sale that a business could stay alive selling its merchandise for 70% off. NO WAY.
The way they do this is simple. Buy a pair of diamond earrings and assign them a "retail" value of $1,000.00 and have them on "sale" constantly for anywhere from $300 to $400 (60-70% off). The $1,000 price is a straw man - an illusion - they have never sold a pair of these earrings for that kind of money and never will for the simple reason that they are NOT $1,000 worth of diamonds. What they are is a pair of diamonds worth $300 to $400 and they are selling them for their full value. No one who does 175 million a year in sales can really sell anything at 60-70% off day in and day out.
Can you work for 60-70% less than your salary? Week after week after week?
The very distance a corporation provides allows them to do this. I own the business and I am the one across the counter who has to look my fellow human beings in the eye when I sell diamond earrings. I cannot in good conscience represent a $300 pair of earrings as being worth 1k - especially to people that I am engaged with on other levels.
The man or woman in charge of the jewelry department for Corporate Meijer does not have this problem. He or she buys inexpensive jewelry in India and China and assigns it a ridiculously high price and puts it on a never ending sale. He or she has such a distance from the end customer that this all makes sense somehow. It must be good, right? After all, the corporation does 175 million in jewelry and watch sales annually.
Julie and I do not play the mark it up to mark it down game. We might have a special time when our $1k pair of diamond earrings can be bought for $900 or maybe $800 but not very often because we cannot easily give away $100 or $200 out of our pocket in real money.
This is why corporations NEED to be regulated. In spite of my pleas, the Attorney General in Michigan will not do anything to stop what I believe to be deceptive advertising because apparently there is no law prohibiting constant "sale" prices.
Well, you say it is a FREE MARKET - no one has to buy there. True, but you would be surprised at the people who get sucked into believing they are buying $1k in jewelry for $300 when they are actually paying full price for a pair of $300 earrings. It is especially hurtful to watch a young man buying a ring for his sweetheart who thinks his $300 is buying a $1,000 engagement ring, when he is really paying full price for a $300 ring that was mass produced in a way to keep the price and quality very low.
The bigger the corporation gets, the more this type of thing can flourish. When Henrik Meijer started his grocery store, he didn't claim that his ten cent apple was really a 70 cent apple on sale for a dime. He was in immediate contact with his customers and would never have tried to deceive them like that nor would they have believed such rubbish decades ago.
I don't mean to single out Meijers - all the giant retailers do the same thing. I buy a lot of my jeans/pants at J C Penneys. They are ALWAYS on sale in some way, shape or form. I have learned that I am paying the full price for my pants when they are 40 to 50% off or Buy One Get One for a Penny or what ever other "sale" they are having. No one ever pays the full price for one pair of pants and gets nothing else for their money there. If you want to get a headache, read all the fine print on the big SALE flyers from Penneys and Macys - the fine print explains how the "regular" price is not really a price that means anything. A small business could never get away with that kind of malarky. Do you do business with a local bank? Do you sit next to your banker at the Rotary meeting or at Boy Scouts or do your kids play on a team together? Could such a banker sell you a derivative stock? Could he or she look you in the eye and get you to gamble your money on a mortgage made to someone who does not have the ability to repay it?
Probably not, but it is easy for someone hundreds or thousands of miles away to do so behind the screen afforded by corporate distance. The idea of forming a corporation is not bad in and of itself, but when corporations grow beyond the ability of the end consumer to actually look the person in charge in the eye, then things can get out of hand - and they do. Bigger is not always better, in my opinion.
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