Business Needs Society

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Business is important, but not more important than the quality of life of the bulk of the population.  Corporations must work within the structure government imposes to ensure a regulated market working for the people’s benefit is the result.  A free market is a utopian myth that exists only in the imagination of economists.  The term ‘free market’ has been twisted in the last few decades to carry only the meaning ‘free from government regulation’.  It is then further warped by the hypocrisy caused by greedy rich people who maintain that government interference distorts markets, yet actively pursue corporate welfare programs.  They are against government interference with their interests, but support receiving taxpayer money without providing benefit in return.  This is the culture of greed that must be struck down.

What is required after this change in definition of a corporation is a balancing force on the market to ensure we gain the benefits of innovation and competition without the stagnation of corporate monopolies.  The incredible deregulation of the US market since 1980 has shown clearly that this approach only achieves a concentration of wealth in the hands of the few; it guarantees monopolies are the result.  This can be directly, where a single company operates in an industry[1], or indirectly, where a single umbrella company owns a controlling share in multiple subsidiaries[2] that pretend to compete.[3]  In order to balance off the tendency for large corporations to swallow smaller ones, engage in anti-competitive practices and outright distort the market in their favour; there needs to be a balancing force.

This balancing force is provided by the government in the form of a program that actively takes profits from large corporations and redistributes them to incubate entrepreneurs, startups and small business.  This incubation is aimed to protect small business from anti-competitive activities and supporting them to grow as required within the principle of a zero global net growth sustainable economy. The aim is to teach, train and encourage new businesses at the expense of old ones, creating a dynamic marketplace dedicated to reinventing itself perpetually within a zero global net growth balance sheet.

End Corporate Welfare

In order to maintain the effectiveness of the incubation program; above a defined level, no corporation can receive ANY subsidy, rebate, tax relief, or support in any form, from the government.  That level in 2013 should be set for any business that receives over $1 billion in revenue.  If their business model cannot operate without government assistance once they are this large, they don’t deserve to be in business and instead should fail and become fodder for the next generation of the business community.  This promotes real market competition to ensure business leaders are focussed on service provision and innovation instead of wasting taxpayer money on corporate welfare.

Any business must recognize that it owes a debt to every society and the world in which it operates.  An obvious example of this debt includes the incubation help received when it was a small business.  There is also the cost to government to provide the safe, stable society, a clean environment and the regulated marketplace that business needs to operate most effectively.

Since it owes this debt, it must be paid from its profits.

This is after paying all workers fair wages, providing a safe and productive work environment and satisfying all operational partners and creditors.  This profit tax serves to ensure that large business always returns the favours provided to it by government, society and environment; it is not payable by small business at all.  The cutoff to attract the profit tax in 2013 should be any company with annual profits over $500 million and this value should be adjusted annually.

Profit Tax

A profit tax will be levied on all companies such that they cannot avoid tax and pay shareholders dividends at the same time.  Before any dividends can be paid the profit tax must be accounted for, to some extent, this is an extension of the franked dividend system in Australia.  The tax level will be progressive such that above a certain point, all further profits would go to the government.   It should start at 2% of profits at the $500 million mark and work progressively up to 100% of profits after the $2 billion mark in annual profits.  The skill in running a large business becomes staying small and focused enough to escape the profit tax, but large enough to be permanently viable.  A new breed of smarter business manager will be required.  The aim is that they are so busy competing in the market, there isn’t enough time or money to waste on regulatory capture.

The form of this redistribution can be more creative than current grant programs or government allocations.  Perhaps people can nominate kickstarter style projects on a government website as a part of their tax return process each year.  Half the revenue is then allocated according to popular desire. The other half can be allocated by a group of business leaders who change every year.  This balances popular ideas with ideas that have the most attractive business cases.  In order to get a project listed on this site, the business startup would need to meet a series of requirements to produce a business plan, cost models and appeal for funding.  The aim would be to filter out both people without a good idea or plan as well as people trying to make their business plan getting money via this program.  If a business receives money from this source, neither it, nor its owner can apply for any further funding for three years.  This encourages them to give the startup all their attention to make it a viable ongoing business.  It must also provide regular reporting along the lines of current grant programs.

The aim is to put both purchasing and entrepreneurial power firmly back into the hands of the masses.

 

[1] http://www.brw.com.au/p/investing/australia_online_monopolies_are_np2sLreue05CSgDcpsDx4N

[2] http://www.huffingtonpost.com/2012/04/27/consumer-brands-owned-ten-companies-graphic_n_1458812.html

[3] http://www.cracked.com/article_18845_6-secret-monopolies-you-didnt-know-run-world.html


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