Big Business

A Love Letter to an American Anti-Hero

[Amazon Link]

Another likely candidate for whenever next I do a "Ten Best" list for books. Tyler Cowen attempts to earn respect for an institution that gets way too little admiration and respect in modern America. Case in point:

So Liz and her fans would be a great target audience for this. Unfortunately, I'm not sure how realistic it would be to expect that to happen.

In my case, however, Tyler's pushing on an already-open door. But I found it still worth reading, because of his contrarian takes, useful statistics, and unexpected insights. (He's a polymath, and it shows.) He's not a Pollyanna about corporations; he points to attitudes and trends that that should change. But on the realistic whole: big business is a massive plus for the USA.

He conveniently takes up, analyzes, and (mostly) refutes common criticisms, one chapter devoted to each:

  • Are businesses more fraudulent than the rest of us? Tyler lists some biggies right up front: Volkswagen, Theranos, Wells Fargo. Bad actors, no doubt. But a good question to ask in reply is: Compared to what?

  • Are CEOs paid too much? Most of such criticism is based on envy and resentment. There's also commonly bad faith involved: the critics are simply using the argument to bolster their own goals, typically political. (Tyler doesn't make this argument much, but I will.)

    But Tyler notes that good CEOs are expensive; you can't just promote a middle-management schlub and expect him to have the necessary skill set. Supply of CEO-grade execs is limited. And the value of an excellent CEO is extreme.

  • Is work fun? This one's easy: no matter how we complain about our jobs, people without jobs are, on average, undeniably worse off. And the psychology is pretty unequivocal: a job done well, no matter how menial, is rewarding to the doer, even over and above his take-home pay.

  • How monopolistic is American big business? Outside of a few limited areas (health care, cable TV, cellular providers) there's not a lot to worry about here. Whatever the theoretical market dominance in an area might be, prices stay low, service remains fine; that's what really matters.

  • Are the big tech companies evil? They're not great, but evil is a stretch.

  • What is Wall Street good for, anyway? The preeminence of American financial service companies is too little appreciated. And it's little known (at least I didn't know it) how America is a tax and banking haven for the rest of the world.

    People demonize Wall Street largely because they don't understand finance. (I don't demonize Wall Street, even though I don't understand finance; I'm just happy with the performance of my retirement and non-retirement funds.)

  • Crony capitalism: How much does big business control the American government? This one was a little eye-opening, because crony capitalism has been a big bugaboo for me. Tyler agrees with the problem, but simply convinces me that it's not a huge problem, because the magnitude in comparison with the total economy is small.

  • If business is so good, why is it so disliked? Or: what is Elizabeth Warren's deal anyway? Tyler's answer revolves around the idea of "corporate personhood"; even the people who deny corporate personhood in one context can act as if it were a real thing in another. (Business doesn't help when it markets itself in anthropomorphic terms: "Like a good neighbor, State Farm is there." "If you can't afford your medication, AstraZeneca may be able to help.)

You really need to read the book to get the full weight of Tyler's arguments, and if you're at all interested (you read down to here, anyway) I strongly recommend you check it out.