Megan McArdle on the weird things some people can believe:
I got a lot of responses to my post last week on Wal-Mart’s decision to raise the minimum wage many of its employees earn to $10 an hour next year. One variety of response stood out: the folks who said “Wal-Mart is doing this because it’s good for its business.”
It stood out because it is almost right, but not quite. The correct statement is that “Wal-Mart is doing this because it thinks it’s good for its business.” Never ignore the possibility that Wal-Mart could be completely wrong.
I remark on this because some of the arguments I saw verged upon what I’ve come to think of as “corporation theology”: the belief that if a corporation is doing something, that thing must be incredibly profitable. This is no less of a faith-based statement than the Immaculate Conception of Mary. Yet it is surprisingly popular among commentators, not just on the right, but also on the left.
This left-wing writer was evincing considerably more faith than I have in the American corporation. Corporations do dumb stuff all the time — for decades, even. Moreover, advertising has multiple purposes. It can of course induce you to consume more of a product, but frankly, no matter how much Pepperidge Farm advertises, it’s probably not going to dramatically increase America’s consumption of prepackaged cookies. So why does it advertise? Because it wants you to choose a Milano instead of an Oreo or one of them newfangled biscotti.
This is corporation theology. Of course, you also see it on the right — arguments that if some product were good or desirable, a corporation would already have provided it. The entire history of human progress argues against this theory.
As these two examples suggest, corporation theology gets trimmed to personal and ideological convenience, as all theologies often are: A liberal is capable of simultaneously believing that market failures abound in industries he or she would like to regulate, and also that Costco knows how to run Wal-Mart’s labor policy better than Wal-Mart does; a conservative, the inverse. Both are wrong. Corporations, like all human institutions, are great engines for making mistakes. The only reason they seem so competent is that companies who make too many mistakes go out of business, and we don’t have them around for comparison.