We all aspire for some form of achievement, and usually applaud those when it is first obtained. Most recently the new wolf of Wall Street (Whitney Wolfe Herd) has been heralded in the media as the female CEO making history and a person to aspire to. But entrepreneurs beware, if you do too well for too long, perceptions of your wealth will likely shift as our culture tends to position wealth creators as greed mongers.
However, it is our greed, not the entrepreneurs, that rewards them with riches. We willingly hand our dollars over for Teslas, iPhones, and Prime deliveries that fulfill all types of needs and desires. As such, we should be thanking businesses for the options they have provided, not giving producers guilt trips for the voluntary exchanges that they have enabled.
So here are some contradictory reasons why we shun those who have profited the most from their success, and why we should change the negative narrative.
1. We like the Underdog, not the Fat Cat
We often celebrate and praise local businesses with shop small slogans, but if that small shop happens to develop into a franchise or attract big investors, our perceptions seem to change (think of all those bands we label as sellouts for, well, making sales). The presence of sustainable profits shouldn’t negate all the hard ground work it took for that entrepreneur to get things going – from unfortunate circumstances (such as John Paul Mitchell’s rags to riches) to endless trials to get the product right (such as James Dyson’s 5,127 protypes for the first bagless vacuum). Any large business was once the small shop, and its growth is a testament that it did something right.
2. We Fail to Realize that Big Business Can Be Good for Small Businesses
During the 2021 Super Bowl, DoorDash tugged at our heartstrings while Uber Eats took a direct approach in calling for the support of local restaurants, and although these ads are self-serving, that’s okay. Our local support fuels their big businesses and vice versa. In fact, many small businesses source from and leverage large corporations, and as such small firms can have a powerful influence on the larger players.
The wonderful thing about a market economy is the derived demand it generates and the supporting industries it can invigorate. Many small towns house big businesses, and Forbes list of America’s Best Largest Employers feature several firms with small town roots, providing employment opportunities that can lead to individual advancement.
3. Hollywood Distorts Reality while Raking in Riches
The villainizing of venture capitalists is common practice in films and tv series (with billionaire Batman as an exception). The media portrays CEOs as being abhorrent and corrupted by their money, but this seems rather paradoxical given that these tycoon tyrants are played by millionaire and billionaire actors who have traditionally gone unscathed for their wealth despite their more than questionable moral standards.
Unlike how it is portrayed in the movies, the market is not a zero-sum game, and the rich don’t profit from people being poor. Actually, many who are rich give back quite a lot.
4. We Think Big Businesses Can’t Be Beat
Supposed monopolies don’t last long in a competitive market given that entrepreneurs play offense, resulting in industry leaders being constantly challenged. Michael Porter attests that substitutions are ever-present but easy to overlook since it differs from the industry’s leading offering. But eventually new entrants will steal the spotlight much like how E-sports is attracting players and investors at an impressive rate and is predicted to surpass traditional sports.
Many of the top firms of yesteryear are only namesakes today (and, at present, invites to Clubhouse are making Facebook notifications look quite dated). Disruptions can and do happen if entry costs (and regulations) are manageable. Entrepreneurs leverage indirect forms of competition and launch not only innovations but substitutions (Kodak is still trying to make a comeback from phones replacing cameras).
5. Concentrated Wealth and Power Makes Us Uncomfortable, But ...
In due time, even the biggest firms can become vulnerable or go bust in a free market economy. The same, however, cannot be said for government run agencies that engage in rent-seeking and seem to proliferate despite inefficacy.
Although the reigns on some public sectors are loosening (such as NASA welcoming competition) others are tightening or showing no signs of ever shifting (think back to F. A. Hayek’s criticism of the monopolization of money). If we are concerned with a firm being in control of too much of a market offering, we should be more concerned of the concentration of power wielding control over entire industries. But even the public sector can’t stop private competition from providing alternatives (from cryptocurrencies challenging fiat dollars to next day deliveries speeding past the USPS).
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Our lives have only benefited from capitalism and those who harness the power of profit given the ability to scale. Profits can help support and grow an organization and serve as a buffer when times get tough. This is why many nonprofits are struggling to sustain themselves given hardships caused by COVID-19 and why the charge for shared value is gaining traction since business solutions can serve as social solutions if meeting a need while making a profit.
Ludwig Von Mises noted that “there is no western, capitalistic country in which the conditions of the masses have not improved in an unprecedented way,” and this is because entrepreneurs pivot according to economic contingencies. So, let them pivot and let us praise them for it and profit from it.
Within the US, each generation has fared better than the last thanks to technological advancements and access to better ideas and resources – and despite unforeseen hardships and externalities. The profit motive has promoted progress in an unimaginable way and talent continues to emerge, and such talent should serve as an inspiration and nothing less.
Kimberlee Josephson
Dr. Kimberlee Josephson is an Associate Professor of Business at Lebanon Valley College in Annville, Pennsylvania, and a Research Fellow for the Consumer Choice Center.