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Wednesday, October 05, 2011

Corporations - To Do Big Things, you need Big Money

To do big things, you need big money and a lot of people. There are fundamentally only two ways to accumulate big money and a lot of people: voluntarily, or involuntarily.

In the voluntary column, you have say Apple. It has accumulated some $80 Billion now through the efforts of its tens of thousands of employees, investors, and executives. It uses that money to invest in great new technology. Big innovations often require big money. Apple spends tens if not hundreds of millions of dollars, and the efforts of thousands of people to bring new products to market. It has earned all the money to do that, through voluntary, mutually beneficial relationships.

In the involuntary column, when the pharoahs built the pyramids, it was done by slaves, under the whip, worked to death with no choice in the matter.

Both "big" projects (the iPad, and the Pyramid) required lots of money and lots of people. But one was voluntary, the other involuntary. One was created through a nexus of the free choice of every participant; the other built from slave labor and coercion.
So, human beings want to do big things. It's part of our nature. Which type of society do you then want? Voluntary - or involuntary. Free, or slave? There really is no middle ground.

A corporation that unwisely invests its money, loses it. Through expenses - such as payroll, utilities, rent. While the people who receive these payments may benefit, they do so only for a limited time. It is not a self-sustaining social organization, it costs more to do this work (such as the debacle at Solyndra) than it generates, and it eats and consumes the human lives engaged in it. Continued against sanity, it would end in starvation.

A corporation that wisely invests its money generates ongoing returns. Those same beneficiaries will benefit for the long term. And the corporation generates profit, which can be used to invest in new ventures, generating even more economic growth, more employment, more value for everyone.

This is the difference between the government's recent "stimulus" efforts - which unthinkingly threw money at unsustainable businesses - and the work of (for example) Apple, which not only continues to grow, continues to employ more people, continues to produce more products, continues to produce more profits - not a dime of which was given to it coercively through taxation.

Since government handouts are often assigned on the basis of political favor and not true long-term economic benefit, ask yourself again: what kind of society do you want? Voluntary, or involuntary?

Government cronyism and wasted billions is the result of involuntary big things.
Corporations in a free market will produce voluntary big things.
Before you protest and attack corporations, be sure that you know what it is a corporation is, and how it works.


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