Why doesn't GM sell crack?

When I'm not busy playing games, I often read and think about what happens in the real world. And like many other people, I'm a bit worried about where the world is heading. One of the chief worriers is Michael Moore. I don't like him very much, I think much of what he does is over the top, sometimes just plain unfair, just to get an effect. Nevertheless I think he is an intelligent person, and among all the crap he says, there are sometimes things worth thinking about. One of these is an essay of him called "Why doesn't GM sell crack?".

In summary the essay asks a provocative question to make a valid point: Companies can't do everything which is profitable, because some very profitable activities (like selling crack) are illegal. So the benefit of the population as a whole, expressed in laws, beats the wish of companies to make profits. Moving away from the stupid drug example, a more valid example would be child labor, sweatshops, and so on. Society has a right to stop companies from exploiting people, even if that exploiting would obviously be profitable.

That is a very important thing to keep in mind in the current situation, where the so-called "anglo-saxon capitalism" is on the rise. Because companies are exerting pressure on governments to "reform" laws that have been made to protect society from exploiters. Now some of these laws might be bad, and it is certainly the right of businessmen as part of the society to participate in the discussion of where the right compromise between protection and profit lies. But unfortunately business representatives often use "globalisation" as blackmail to get their point of view through: "Reform, or we move all our factories to China".

As a result, globalisation, which is in principle a quite beneficial process, got a very bad name (and China as well, often undeservedly), and there is a big anti-globalisation movement. When in fact the people are just justifyably worried about becoming victim to unrestricted capitalism, and the enemy is much closer home than "globalisation" or "China".

Reviewing laws that restrict business and provide welfare is a good thing. But the goal of that exercise has to be maximizing benefit for the society as a whole, not just for the business sub-group of society. Classical economic theory defines that all wealth is created from three factors: land, capital, and labor. The big problem is that often different people supply these three factors of production, and afterwards you have to distribute the added wealth between them. Nowhere in economic theory does it say that it is capital who must control this wealth distribution, paying a minimum for land and labor, and keeping the major part for itself. It is only the fact that globalisation has made capital more flexible, while land and labor is often less mobile, which gives capital the upper hand at the moment. It is the job of governments to resist this pressure, do reasonable laws that benefit all, and keep in mind the benefit of the other "stakeholders", not only the shareholders.
- posted by Tobold @ 12:54 PM Permanent Link