There are only two kinds of businesses

Eric Garland Culture Trends 1 Comment

There are two kinds of businesses in today’s economy.

The first kind creates value slowly, over long periods of time. The owners build it based on values of both personal and financial integrity. They see the people working in and with the business as a great investment, not as a cost to be slashed. Profitability is required for the larger health of the enterprise, but is not the sole reason for the business’ existence. The finances of such an enterprise are simple and easy to explain, and the company only takes on debt for capital expenditures. These businesses make life better for all stakeholders as time goes on. Their growth is a positive thing.

There’s another kind of business roaming the landscape. This type of business quickly sucks away value that other people built slowly. These schemes depend on the rapid churning of bubbles, usually with the help of media that will create a frenzy. People are a nuisance to such businesses, an expenditure you hope to limit through software and outsourcing as soon as possible. Profitability is the sole reason for its existence, and even if the business itself isn’t profitable, the executives still need to be lavishly compensated. The finances are usually absurdly complex and debt-laden, which helps the company grow explosively, though at great risk. The complexity helps cover up for a multitude of sins, since few can see the flaws of the business without significant skill and time. These businesses make life less stable and humane over time, and their growth has seen the economy become less equitable and more precarious.

If you look back at American business, this second type of business emerged in the 1980s as the financial sector began to take primacy in our economy, outpacing manufacturing. In the 80s, we really did not understand the long-term effects of structured finance, unchecked globalization, and the selling out of workers. We thought that perhaps, alongside the fortunes going to a few institutions and their technocrats, we would profit as a society. But if we consider the last 35 years as an experiment, then we now have conclusive evidence that this second type of bubble-driven, complex, vulture capitalism is a failure for all but a few.

We must then make an active choice as a people to think differently about business. Now that the experiment is concluded, we can intentionally choose to build, work for, and patronize businesses that build our communities, value and cherish workers, create sustainable prosperity, and keep needless complexity to an absolute minimum.