Monday, August 24, 2009

Wants versus Needs and the Profit Incentive

Lately it seems many of our businesses aren't genuinely doing the jobs for which they were chartered. For example, our insurance companies aren't covering those of us who may need to file a claim; they're only selecting those customers who aren't likely to use their services. Our pharmaceutical companies likewise aren't curing us of disease; they're merely treating our symptoms of illness for years and years. Neither are our banks making it easier for us to save money; they're actually making it more difficult by charging us exorbitant fees, fines, interest rates and monthly service charges. On and on it goes, causing many individuals stress and suffering in virtually every arena of social life.

Why is this happening? Something is clearly wrong with the way we've structured our economy when our businesses are being rewarded for NOT doing what we believe they're supposed to do. To find an answer we must examine the corporate structure a bit more closely. In doing so we discover that, in reality, we're financially rewarding companies that are most successful at making money. The corporate priority is NOT to provide something that benefits society, but to turn a higher profit - however that looks. In other words, the key to making more money in our world is to make more money.

That formula emerged out of the thinking that human beings would work harder and achieve more in life if doing so enabled them to acquire more material comforts for themselves and their families. When people achieve more, society benefits. Thus to inspire people to provide what they want for themselves theoretically benefits society.

Material comforts can only be acquired with money in a modern society, therefore money has become the main reward we offer for human endeavor. Those endeavors include not only our individual efforts, but our corporate (collective) efforts as well.

When our businesses provide society with a product or service people want they are rewarded with money, which they then distribute among their owners (stockholders) debtors (bondholders) and employees. Theoretically at least, if our businesses don't give us what we want we won't support them, and they'll be replaced by businesses that do give us what we want. The money they earn flows back into the system and encourages other companies and people ,to consume the goods and services they need, as well as to provide the goods and services others want. In theory then, this strategy sounds like a good one.

In practice though, what we find is that this strategy has developed multiple flaws. For starters, what companies offer isn't necessarily what people want, but what they NEED. That fact alone eliminates the only power we have to vote against corporations with our wallets, which was supposed to be the "check and balance" part of the equation. I can ignore a want in order to punish a company for not behaving in a way that serves society, but I can't ignore a need. If by law I'm required to have auto insurance in order to drive a car, I must buy it even if I detest the way every company that offers it prices their product. Likewise if I need medical attention I can't quarrel over the doctor's price for the surgery I require. Nor can I argue with the banks over their high mortgage interest rates if I need a place to live and raise my family.

When companies are relieved of the burden of having to provide people with what they want in exchange for public support of their goods and services, they are free to force people to do whatever they demand in exchange for what people need. That grants companies enormous power to "squeeze" their customers for the sake of higher profits. The more money companies make the more they earn for their owners (stockholders) so the more support they get for their endeavors. Once one company has figured out a new way to "squeeze" its customers, other companies in the industry follow suit. Their motive is to stay financially competitive in the short run so they can survive, not to provide a better level of customer service in the long run so humanity and society can thrive.

As modern society has advanced, more and more of what used to be "wants" have become needs. If we hope to contribute anything of value to our society we must have access to advanced education, automobiles, computers, health care, groceries, water and electricity. The more who become disenfranchised from those needs the fewer who will have the capacity to offer the best they have to give to our civilization. Companies may therefore be growing richer, but the evidence is piling up all around us that our society is becoming collectively poorer.

The present recession we're in is a reflection of the fact that companies can't thrive (turn a profit) for very long when they're collectively making life harder for their own customers. Ship jobs overseas to cut your costs, and you've reduced the amount of collective wages available to buy corporate goods and services. Raise prices on your customers, and you hinder their ability to adaquately care for the children who will be your next generation of corporate employees and customers. Deny adequate health care to your customers, and you make it more likely the entire social base of employees and customers will either fall ill or be required to take care of someone who is. Clearly then, businesses that thrive on screwing their customers by withholding their needs or making them harder to acquire are ultimately screwing each other as well as themselves.

The moment we collectively convert an item from a want to a social need, we've surrendered our power to get along without it. Without a bank account, for example, we can't cash our paychecks or pay our bills, so we become marginalized by society. That pressure grants undue power over people to the corporations that provide us the necessary service. Our economic structure doesn't yet reflect this changing nature of human society, which is why so many of us are suffering because we're no longer able to meet our basic needs.

The first step toward repairing this problem would be for humanity to come together and discern what exactly are the things we consider needs, and which are wants that most of us can do without. To then reflect this difference in our economy by mandating public access to all the things we consider needs would help us to shift the incentives in the system and alleviate much of the suffering we're experiencing today.

The moment we differentiate between human wants and needs it becomes apparent that we need to shift corporate incentives. To profit off the needs of another is inherently immoral. How ethical is it for me to deprive a starving person of the food he or she needs to survive, in order for me to make more money so I can satisfy more of my wants? Needs and wants can never be equated, nor should they be. No business should ever have the power to turn off an elderly couple's electricity and cause them to freeze to death (or slow roast in summer) because the people can't afford to pay their bill. It's not a question of "efficiency" or "profitability;" it's a question of our inherent humanity.

What we choose to be, and how we choose to behave toward each other is the measure of our deepest human values. As Jesus once said, "Do unto others as you would have others do unto you." That statement is a powerful pointer toward a single human ethic we could all live by. If every person in every encounter they have during every day would check himself by asking that simple question before he acted, imagine how swiftly the world around us would change!

What are we waiting for? If we wait for the "other guy" to act morally before we're willing to commit ourselves to the task, it'll never get done. We can each become the change we wish to see in this world by demonstrating the ethic that says every human being is entitled to have their basic needs met by society, and work toward that goal.

If we ask the question, "How may I serve the needs of my fellow man?" and let that be the guide to our actions, our corporations WILL change along with us, because they ARE us.

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