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Quotation of the Day…

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… is from page 23 of my colleague Tyler Cowen’s 2019 book Big Business: A Love Letter to an American Anti-Hero (original emphasis): Further, particularly now that digital communication has raised the price of corporate dishonesty, big business has by necessity, and despite its shortcomings, become one of the most effective institutions for limiting the extent of fraud. In fact, that is one significant reason big businesses became big in the first place – they evoke more trust in consumers, and rationally so. You’re more likely to be ripped off by your local TV repairman, your local doctor, or maybe even your cousin than you are likely to be cheated by McDonald’s or Walmart. McDonald’s and Walmart, quite simply, have valuable national and international reputations to lose, and they

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… is from page 23 of my colleague Tyler Cowen’s 2019 book Big Business: A Love Letter to an American Anti-Hero (original emphasis):

Quotation of the Day…Further, particularly now that digital communication has raised the price of corporate dishonesty, big business has by necessity, and despite its shortcomings, become one of the most effective institutions for limiting the extent of fraud. In fact, that is one significant reason big businesses became big in the first place – they evoke more trust in consumers, and rationally so. You’re more likely to be ripped off by your local TV repairman, your local doctor, or maybe even your cousin than you are likely to be cheated by McDonald’s or Walmart. McDonald’s and Walmart, quite simply, have valuable national and international reputations to lose, and they will act to preserve their brand identities. Big businesses have more to lose from fraud, they are monitored more closely, and they are more likely to depend on the commercial value of a respected national or international brand name.

DBx: Brand names play a central role in the market process (and, also, the legal process) of internalizing on companies the value – positive and negative – of the consequences of their actions. Brand names help the public hold businesses accountable for businesses’ bad actions and to reward businesses for businesses’ good actions.

For the same reason that burglars and bank robbers hide their faces with masks and do not publicly announce their names, companies intent on deceiving, cheating, or otherwise profiting at the public’s expense would much prefer to operate anonymously rather than under brand names. The truth of this reality isn’t diminished by the fact that the world is filled with intellectuals who, having intellects both narrow and shallow, ignorantly denounce brand names as a sinister device that businesses use to rip the public off.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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