Miss Management: Legislating profit
July 24, 2009 | Galynn Nordstrom
Who really understands capitalism in its more aggregate forms? One day the economy is happily inflating, and those of us with quaintly unattractive and gently crumbling old houses were watching market values and property taxes skyrocket and wondering what it really all meant, since we didn't want to move; the next day a bunch of panicky New Yorkers send us into a knee-jerk recessionary spiral. The country still has the same infrastructure, the same production capacity, the same talent and expertise-but suddenly none of it's working. That's not an economic theory in action. It's a failure of imagination.
(Nothing like that would have happened if the NYSE were located in Minneapolis, incidentally. Minnesotans are not only stoic, we're also generally well-meaning. What this country really needs is a good queen.)
So we let the "market" stabilize itself, except that billions of dollars of our money are given to financial institutions that are "too large to fail." Yet it's small businesses that are the backbone of the American economy, especially when it comes to employment, and that Recovery Act money seems to be barely reaching those destinations (visit www.recovery.gov for state-by-state details). Businesses that aren't too large to fail are not too small to matter. Small businesses, especially family-owned businesses like many in the specialty fabrics industry, are, somewhat paradoxically, often less susceptible to economic swings. But after nearly a year of recession, almost every business is cutting back. Funds are starting to loosen-for example, the SBA's America's Recovery Capital Loan Program can provide up to $35,000 in short-term relief-but budgets continue to tighten. What happens if small business doesn't start seeing the benefits of this recovery and reinvestment activity?
In an editorial in Specialty Fabrics Review last March, I wondered whether the principles of Corporate Social Responsibility (CSR)-often touted as being "just good business"-were likely to be abandoned by companies when they're arguably not good business, at least in terms of short-term profits. Now, as I watch the furious political debates over who should get money and how accountable they need to be, I'm starting to re-think that whole capitalism thing.
At a St. Patrick's Day party a few years ago, during one of those sparkling, ale-fueled discussions to which editors are particularly suited, I heard myself say that "the only way to stop the drug trade is to make it unprofitable." Expanding on that concept, perhaps the best way to ensure that companies of all sizes are good neighbors and good citizens is to make it unprofitable not to be, or at least less profitable. I can envision a series of tax breaks or other financial incentives for companies that embrace the principles of CSR, not just during the economic recovery (although that's a good start), but as a general rule. As for businesses who stubbornly adhere to the idea that all they need to do is make money without breaking any laws, perhaps we can find the financial equivalent of putting them in the stocks for a couple of days and pelting them with rotten vegetables and leftover Tater Tots.
And that's only one part of the new economic equation. Last year, doing my bit as a stimulating consumer, I bought a purse made of recycled tires-wide shoulder strap, pebbled texture, lots of pockets, secure closure, perfect size and shape, and so reasonably priced that I made a point of mentioning it to all of my over-accessorized friends.
Ten months later, after carrying that purse nearly every workday, that recycled rubber exterior is flawless-but the fabric lining has started to fray. As part of the specialty fabrics industry, I had naturally expected the fabric to outperform the rubber. It's difficult not to feel in this case that the specialty fabrics industry isn't doing all it can to support a sustainable lifestyle ...