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This is the story of Bob The businessman.

Suppose a local businessman, let’s call him Bob, went around town raising money from the townspeople to open a car dealership.  Dozens and dozens of people in town invested, putting in $1,000, $5,000, and a few putting in as much as $50,000 and $100,000.  Bob raised a lot of money for his business.

After a while the investors found out Bob the Businessman was using some of their money to help his brother run for Mayor and several cousins to run for city council, and some of it to make his wife head of the Arts Council for a good salary. Then they learned that he was using some of it to fund a local organization that did nothing but push for tax breaks for . . . businesses just like Bob’s. (And to push for "deregulation" letting Bob use his company's money to do things like ... fund the organization.)

In the election his brother was elected Mayor and his cousins took over the council.  Once in charge of the city, they pushed through a big contract for Bob to supply cars to the city (many of which the city didn’t even need.) The city also exempted Bob’s business from taxes, even giving it subsidies.

This all of course made the car dealership very profitable, and the investors started asking when they are going to get a dividend.  But they found out that Bob’s business has opened a subsidiary based at a post office box in the Cayman Islands.  This Cayman Islands subsidiary had been buying cars from the manufacturer at wholesale and turning around and selling them to Bob’s parent company for just under what the dealership sells them to the public for.  As a result all the profits went to the Cayman Islands subsidiary, and Bob wasn’t bringing any of it back to distribute to the shareholders!

Next the investors learned that Bob had been living really high on the hog, paying himself many millions of dollars.

When the local investors got fed up, they gathered to protest in front on Bob’s business.  “You shouldn’t be using our money to get your brother elected mayor,” said one. Another said, “You shouldn’t be using our money to give to the arts council!”

By then Bob owned all the newspapers and TV and radio stations in town, and they were all telling the rest of the town that the protesters were all communists.  His brother the mayor sent the police to arrest them.

Next Bob got the city to relax the regulations that specified how well the cars he sold should work, and started selling cars with defects to the townspeople. The city also limited lawsuits. The customers cheated by Bob couldn’t do anything about it!

Over time Bob’s actions forced all of the honest, responsible car dealers to either operate the way Bob did, or go out of business. The character of the whole town changed.

Eventually, though, Bob’s business practices became so bad that most of the townspeople went to the city and demanded that they do something about it.  The city conducted an "investigation" and reached a settlement with Bob’s car dealership. The dealership agreed to pay a modest fine, which meant the investors were on the hook to pay it out of any dividends they might receive. (The city's lawyer who negotiated with Bob later left and got a very high-paying job working for ... Bob.) Bob got to keep the enormous amounts he had been paying to himself.

Bob lived happily ever after.

This fable in no way is meant to make you think about the way that modern American corporations and the current American political system operates.

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This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture.  I am a Fellow with CAF.  Sign up here for the CAF daily summary

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Comment Preferences

  •  Tip Jar (7+ / 0-)

    --
    Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

    by davej on Wed Feb 27, 2013 at 06:10:10 PM PST

  •  I think Bob's initial capital raising (1+ / 0-)
    Recommended by:
    Larsstephens

    was likely a violation of the Securities Act of 1933 and wouldn't qualify under the Regulation D exemption. So Bob was off to a bad start right from the beginning. That was the first of about a half dozen illegal acts in your example.

    "let's talk about that"

    by VClib on Wed Feb 27, 2013 at 06:43:21 PM PST

    •  Of course (0+ / 0-)

      but you get the points I am making here.  Our current system is driving out the businesses that want to do right by their customers, employees, shareholders, communities, country, etc.  

      I don't blame the businesses, they are doing what they are allowed by law, and this forces competitors to do the same.

      I blame the corruption in the politics -- and the people causing it. In other words, don't blame Walmart the company for the way they "act" (companies don't act, people do.)  If Walmart "behaved' better then Target would take over top spot and we'd be complaining about Target instead. Etc.  

      But the Walmart family's use of money to corrupt our politics should have been and must be stopped. Same with Koch, and the rest of those corrupting the system.  Honest businesspeople are placed in a terrible bind by our current system.

      --
      Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

      by davej on Wed Feb 27, 2013 at 07:15:14 PM PST

      [ Parent ]

      •  davej "allowed by law"? (0+ / 0-)

        Not in your example which is rampant with criminal violations base on current statutes.

        "let's talk about that"

        by VClib on Wed Feb 27, 2013 at 07:23:23 PM PST

        [ Parent ]

        •  My example (0+ / 0-)

          is just a fable.

          "This fable in no way is meant to make you think about the way that modern American corporations and the current American political system operates."

          If you recognized the practices of any businesses you know, that's a coincidence.

          --
          Seeing The Forest -- Who is our economy FOR, anyway? Twitter: @dcjohnson

          by davej on Wed Feb 27, 2013 at 08:43:23 PM PST

          [ Parent ]

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