As an engineer, I’m a huge fan of the Dilbert cartoons and it was neat to see its creator, Scott Adams, rise in popularity as he went after a lot of bad leftist arguments. I certainly didn’t agree with everything he said, but it was refreshing to see a person speak his mind about some of the crazy ideas that people have.
So it was surprising for me to see him tweet out a basic leftist talking point today. With the passage of the tax reform bill, a lot of corporations will be getting tax breaks. This of course has a lot of people on the left seething with rage. Since they could no longer steal as much of their money via taxation, they resorted to Plan B: lecture the businesses on how they should use the money that the government was apparently so foolish to let them keep.
Scott Adams took the news of AT&T’s decision differently yet also the same. He tweeted:
Your move, other corporations. Are you Santa or Scrooge?
Huh? It’s great for their employees that AT&T decided to pass their tax savings along in the form of employee bonuses. But Adams is taking the typical leftist position that employees are somehow entitled to the property of business owners. He ignores a key point in how wages work. Employees and employers agree to a wage for a given job and employment occurs. Once the work is completed and the wages are paid, neither party owes the other anything. There is no more obligation. Each party is free to request modifications to the employment arrangement at any time and if an agreement cannot be made, each party is free to terminate the employment.
This would obviously change if a contract were in place. The above is the basic idea of how employment and wages work. If a contract existed, however, then both parties would be bound by its terms. If a company agreed to pay its employees a portion of their tax savings in the case of a tax cut by the government, then they would be obligated to pass those tax savings to their employees. That’s simple enough.
But that’s clearly not what Adams is talking about. There is prima facie no obligation on a business to pass any savings or additional profits to its employees. The employment agreement was made and the wages were already paid. That’s not to say that it may not be a good idea to send the workers a bonus check, but that’s up to the business to decide. After all, it’s always a good idea for both the workers and the business to treat each other well.
So here’s an ironic twist. Maybe the decision not to use the tax break as bonuses or pay raises will benefit the employees more in the long run. A lot goes into running a business and outsiders like the government, Scott Adams, or someone screeching on Facebook are not better at making business decisions than the people who run the business. Perhaps it’s better to use the money to pay off debt or make capital improvements. Maybe it gives the business an opportunity to expand or have some much-needed liquidity. Each of those would presumably work to strengthen the business, which is better for the employees.
There’s a lot to criticize many of the large corporations for. But let’s not start criticizing them for acting in the ways that make a business a business.
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