Corporations produce products or services. There are costs involved. The corporations try to externalize as many of those costs as they can because it means more profit for themselves. If one corporation externalizes more costs than another, they have an unfair advantage. Taxes help neutralize that advantage. Then it is up to the consumer to patronize the company that provides the best product for the price with those costs included. See how that works?
As opposed to what, internalizing costs?!? Don't use words that you don't understand in hopes of sounding "smart". A business doesn't try to "externalize" anything. That's as absurd as saying a business tries to "oxygenate" their costs
A business tries to do one thing and
only one thing - make a profit. They do that by earning more money than they spend. Now, if they are smart enough to reduce what they spend (or as you call it "externalize cost"), what is "unfair" about that? If they outsource labor with a 3rd party company at a better rate than having the labor internal, what is "unfair" about that? If they purchase materials for their product from a company that offers them a better price than their previous supplier, what is "unfair" about that?
Hmm... everything he said actually has some element of truth for particular points in time for some corporations. I would not assume that just because he was brief in his vernacular that he is ignorant or wrong..
Let's break it down:
>>> Corporations produce products or services. There are costs involved.
Good so far.
>>> The corporations try to externalize as many of those costs as they can because it means more profit for themselves.
During times of economic distress corporations will often cut back on expenses, one of the major expenses is salary. Some corporations have particular expertise that pays a higher rate of return than other types of expertise that they spend money on. To improve the bottom line those companies often outsource things for which there is a low rate of return and/or things for which they do not have the core competency to do a good job. For example, many corporations outsource their accounting work, some outsource their IT work, some outsource low profit projects to 3rd party consulting firms.
>>> If one corporation externalizes more costs than another, they have an unfair advantage.
Other than his ascription of fairness he's also on target here. The fact is a company that focuses on profit return and core competencies actually can be a company that can "pounce" on new markets that are associated with their core competency. Let's call it the lean mean fighting machine analogy. An old company that reduces their payroll costs can more easily "buy" smaller companies and absorb the payroll increase.. this is akin to laying off the old folks to hire fresh-out only in much quicker fashion and without the added training expenses.
>>> Taxes help neutralize that advantage.
Odd statement based on his POV that taxes are good, but yeah if you tax corporate profits then that corporation cannot subsequently use the cash to buy smaller companies, and/or expand into new markets that may otherwise be filled by their competition, fat dumb or otherwise.
>>> Then it is up to the consumer to patronize the company that provides the best product for the price with those costs included.
Goes without saying that when allowed consumers will try to buy best products they can afford. He has not tied the previous steps to this step, but it's not hard to examine examples where government has created markets with taxpayer (including corporate) funds that compete with the taxpayer (in the example of the corporate tax.) For example, some state universities receive government grants and use those grants to build and sell. These universities compete with the corporations for sales. They have low cheap labor from the government assisted students, and grant money from corporate taxes. Yeah it sucks to be working on a corporate project that is shelved because the State decided to fund your competition with you profits.
>>> See how that works?
Yes, I suppose I do.
