Definitions - #301 - #22 - What does it mean to be a “good corporate citizen”?

Can free enterprise survive?

First let’s take a typical “start-up” corporation. The “risk taker” has an idea for a product. He is willing to risk most of what he’s got, say $5000, and he borrows from parents and friends another $10,000. He and an unpaid friend begin to make this product and sell it in the open marketplace.

The difference in his actual costs and what he receives from the sales is a so-called “profit”.
His actual costs must include at least, say 5% interest, on the $10,000 he borrowed from his parents and friends plus a minimum amount so he and his friend can live and eat.
Now let’s say he gets a new order at his selling price for $100,000. Wow! He needs to hire some extra production and shipping help so he goes to the bank and on the basis of his order and his character the bank loans him an additional $50,000 for four years. His costs have now gone up to include his new production help, and an interest payment of 5% on his original of $10,000, and his new loan which carries and interest on the unpaid balance of 7% and a payment of one fourth the total borrowed amount (or $25,000) to the bank as well as his and his friend’s living costs.

Along comes the government and says he now has to pay an income tax.
Along comes the unions and he has to meet certain wage, hour, pension and health costs.
Along comes the application of certain worker’s benefits including Workman’s Compensation Insurance, disability laws and labor regulations, also included is a mandatory owner’s contribution to Social Security benefits. The costs have gone higher but his sales price stayed the same. He must raise his sales price to equal the increases in costs. Can he still maintain his competitive position with his new sale of $100,000?

Suppose he is able to successfully increase his price to cover his increased costs.
Suppose he shortly is able to get an order for $500,000! He goes back to the bank with his new order and the bank loans him an additional $400,000. Same terms as before!
This new risk taker now has to add to his production and shipping labor, he must now have a full time accountant, he must have a budget for legal counsel, he must now have managerial help...... etc. He is in big business!

Soon his original borrowers want to be paid off with interest and a profit for their “risk taking”. His friend wants more than his “living costs”. The bank wants him to go public so he can collaterize his loans with stock. He, the original “risk taker and inventor” wants some kind of increase in his “living costs” and He wants to build a future for his family.
All these considerations must come out of so-called “profits”.

Query........
What % of the “profit” is the original “risk taker and inventor” entitled to?
What % of the “profit” is his friend entitled to?
What % of the “profit” is “being a good corporate citizen” and satisfying union and worker demands .
Can the company still sell its product at the new price which includes all these demands?

Query.....
If, in order to survive in a free, competitive environment, the company must use labor which is at a lower cost (outsourcing) in order to maintain as much of the company as it can; or, should it fold up and close its doors?
If the owner or his staff or labor ask for an unreasonable payment for services and causes this company to raise its prices above the competitive level and thus fail in the marketplace, who should bear the burden? What are the “reasonable” costs of service? Who determines? What is “free enterprise”?

What does it mean to be a “good corporate citizen”? Who determines a “living wage”?

Who determines the “value” of the contributions made? Is there even a question without the original “invention”?

Is “free enterprise” viable?