Big Business Looks a Lot Like Big Government
The business community has long claimed that private enterprise was inherently more efficient in providing goods and services than the government. The premise being that government was prone to bureaucratic bloat with ever increasing taxation, over regulation and the centralization of authority. If big government created these practices, big business seems to be making them into an art form.
Anyone that has worked in a large corporate environment outside of a headquarters understands the concept of an unyielding monolithic organizational structure, taxation through resource allocation fees and administrative charges, authority limits that constrain the most mundane day to day operations and unfunded mandates through proscriptive processes, dictated revisions to plans with stretch goals and expense reductions without revenue revisions. The corporate notion that these practices merely instill greater work ethic, best practices, economies of scale and competitive advantage sounds much at odds with the argument voiced by big business that big government thinks it knows better how to spend your money than you do and doesn’t trust you.
Corporations by and large pay on the scale of responsibility and incentivize on profitability. There is, therefore, a classical capitalistic drive to grow larger. Like government, corporations have an insatiable appetite to grow, not out of need, but out of desire. Well managed companies do grow organically and can utilize acquisitions efficiently to create growth quickly. Far too many companies, unable to grow organically, utilize acquisitions as the only method to grow. This rarely results in the creation of shareholder value, but in shareholder mollification. Again, like government where the tax payer foots the bill for growth, the shareholder picks up the tab for corporate growth.
There are examples of well run corporations that do make big government look lethargic and inefficient. Unfortunately, far too many big businesses look painfully like big government. It’s time for the markets to recognize this and force change. Capitalism is nursing an enormous black eye as a result of the current financial crisis. Big business can do its part in the recovery by practicing what it preaches and differentiating itself from big government.
Richard Gabel
Comments