If you have been following the news, you know about the political theatre that has been going on in the capitals of both the United Sates and Canada. In senate hearings, parliamentary committee meetings and media interviews, politicians have been accusing business for the problems of the governments’ own doing.
For example, tech CEOs have been held responsible for child sexual exploitation on their companies’ platforms (such as Instagram, TikTok, Snapchat). Grocers have been accused of food price inflation. And others, like BCE, a large Canadian telecom and media company, has been scolded for eliminating jobs to restore profitability.
When we see the news headlines about online sexual exploitation of children, experience daily the stubbornly high food prices, and witness job cuts, it is easy to take the governments’ accusations at face value. No wonder the public distrust of corporations is high. But are the accusations based on evidence? Are corporate CEOs real villains, or are politicians just portraying them as cartoon villains, like the cold-hearted Scrooge McDuck or the conniving Mr. Burns in The Simpsons who stop at nothing to maximize profits?
I argue the latter. Politicians are scapegoating corporate CEOs for the problems that ultimately the governments created.
Children are falling victim to online predators, not because the tech companies are not doing enough to block criminals (and they are doing a lot, finding criminals amongst millions of users). Online predators succeed because governments have failed to catch and punish criminals that sexually lure and extort children. In general, soft-on-crime policies have increased criminality. (Governments have also made children more vulnerable to predators of all kinds through “progressive” public-school education that has destroyed children’s ability to think for themselves and to develop self-esteem).
The persistent food price inflation is not due to the grocers’ allegedly ballooning profit margins but to governments’ uncontrolled spending, often justified as “protecting” citizens against “corporate greed” and other “threats.” Ever-growing government spending has increased the cost of everything (energy, labor, credit) and caused price inflation which we acutely feel in our pocketbooks at grocery store checkouts.
Corporations competing in free markets sometimes have to lay off productive employees when their leaders have failed to anticipate competitors’ new technologies or shifts in consumer demand. However, the profit motive and free competition keep corporate executives alert and minimize such mistakes.
The media and telecom company BCE’s recently announced 4,800 job cuts (including at its unprofitable radio and television businesses) were not about correcting the management’s mistakes but a response to the government’s interference in the market that would lead to further financial losses. The CRTC (Canadian Radio and Television Commission) would force BCE to sell access to its network to its competitors at below market prices, to “boost” competition. Ironically, prime minister Trudeau and other politicians scolded BCE for “lack of corporate social responsibility” and “corporate greed” – as if it were possible for companies to stay in business for the sake of “social responsibility” while losing money.
It is not the corporate CEOs who deserve to be blamed: governments are the real villains. No corporate CEO seeking to maximize long-term profits would want to harm their customers, employees, suppliers, or other stakeholders on whom their company’s profitability depends. Of course, many products (not just the internet, social media platforms, and cell phones) can be abused for criminal purposes, from household chemicals to kitchen knives and cars. It is impossible for their manufacturers to prevent all such abuses. It is the role of the government to deter, prosecute and catch those who commit the crimes.
The CEOs are doing all they can to direct their companies to create material values and trade them with customers who are willing to pay for the benefit that the products provide. Otherwise, companies go out of business (absent government cronyism). Companies competing to maximize long-term profits attract customers by continually working to offer products with the best possible prices and quality. For that, they and their CEOs deserve thanks, not blame.
What should governments do instead of blaming corporations and their CEOs? They should reduce unnecessary spending to stop inflation and allocate their (or rather, the taxpayers’) limited resources to proper uses, such as crime deterrence and law enforcement to protect citizens’ individual rights. (And governments should privatize education so that children’s development as independent thinkers can be restored). They should also cull regulations to encourage private investment and to free the markets to more competition – including in education – that lowers prices and increases the quality of products.
As for company CEOs, they should direct their companies to do what is feasible to protect their customers from harm while using their products, to welcome competition, and to strive for improved efficiencies to maximize profits.
The outcome would be a win-win situation for all.
Photo credit: Pexels.
Jaana Woiceshyn teaches business ethics and competitive strategy at the 