
To create a society that works for everyone, we need to align the incentives of business with those of the common good. Too often, companies are rewarded for harming our environment and our communities.
By leveraging the free market, we as consumers can stop giving money to industries that harm society and reward companies that contribute to shared prosperity.
Businesses should be incentivized to act in the best interests of their employees, consumers, and planet earth, rather than simply maximizing profits. We need corporations whose interests are aligned with ours, a private sector that promotes the common good.
Let’s get everyone (businesses, government, people, non-profits) on the same page and make progress in so many areas we all want to see improve.
What are Incentives, and How Do They Work?
Incentives are a way of motivating people to do something. They can be positive (rewards) or negative (punishments), but in either case, they are meant to influence behavior. In the business world, incentives are used to motivate companies and employees to act in a certain way.
Incentives can be a powerful tool for shaping society, but they need to be used carefully. Otherwise, they can do more harm than good.
The Benefits of Aligned Incentives
When business and societal incentives are aligned, it means that companies are motivated to act in ways that benefit society as a whole.
This could include things like protecting the environment, investing in employee training, and encouraging the government to pass helpful laws, all while providing quality products and services.
Granted it’s tricky to find the right balance, but what we’re doing now isn’t working out great either.
Government and Incentives for Businesses
Some people believe it’s up to the government to incentivize businesses to help society at the national, state, and local levels. Often, these incentives take the form of tax breaks or subsidies.
Unfortunately, this often backfires. The problem with government incentives for businesses is that they don’t always produce the desired results.
The curse of unintended consequences is one reason to be wary of politicians and lobbyists providing incentives.

For example, a company might be given a tax break to relocate to a certain city. However, the company might not create any new jobs in that city. Or a company might be given a subsidy to increase the production of a certain product. However, the company might simply use the subsidy to increase its profits, rather than to increase production.
The government incentivizes businesses to spur economic growth, but oftentimes these incentives go to businesses that are already doing well. This leaves out small businesses and entrepreneurs who are the backbone of our economy.
While they may be well-intentioned, the government trying to “pick winners and losers” has a rough track record.
Examples of Government Incentives that Harm Society
Some of the most harmful incentives are those that encourage companies to damage the environment or take advantage of their workers.
One example of an incentive that harms the environment is the tax break that companies receive for drilling for oil and gas. This encourages companies to exploit our natural resources, even though it harms the environment.
The debate over the ethanol subsidy introduced by George W. Bush is another example of a government action that runs counter to the overall well-being of the country. And because Iowa, the country’s largest corn producer, plays an outsized role in the presidential primary process, it’s going to be awfully difficult to change it.
Another example of an incentive that harms society is the way that companies are rewarded for moving jobs overseas. Much of the tax code benefits the biggest companies and wealthiest individuals at the expense of everyone else. This incentives companies to outsource their labor, which harms workers in developed countries.
For example, the carried interest tax loophole encourages more people to go into finance or run hedge funds that do little to increase the overall welfare of the country and instead line the pockets of a few at the expense of the many.
So often the government incentives are not aligned with the general population. They encourage companies to act in ways that harm society, instead of promoting the general welfare.
The Free Market
Less Bad holds the position that a better way to incentivize business is through the free market. Incentives, rather than top-down mandates, are the key to unlocking the power of the free market to create a society that works for everyone.
The free market is one of the most powerful tools we have to affect change and promote progress.

Through the choices we make as consumers, we can incentivize businesses to act in the best interests of their customers and society, without the government or other central authority trying to predict the future. This creates a system where companies have to compete for our dollars by “doing good.”
They are rewarded for not only providing quality products and services at a fair price but for contributing positively to society at large.
What Role Do Incentives Play in a Free Market?
In the free market, incentives are a way of motivating people to buy or sell goods and services. Businesses are motivated to provide quality products and services at a fair price to attract consumers. This creates a system of accountability and shared prosperity.
As Consumers, What Should We Reward?
Consumers should increasingly hold companies accountable for their entire impact as a business. Businesses should not be taking more out than they provide. The whole of the business is more than its parts. It should be a contributing member of society, not only taking.
Companies that are helping society, not harming it, should be rewarded.

Consumers can do some research and talk to friends and family when making purchasing decisions.
Businesses Can Improve Society in So Many Ways
The trick is for businesses to offer goods and services at reasonable prices, while also helping (or at least not hurting) society at large.
One way corporations can “do more” to help our society at large is by providing jobs and training for workers. This gives people the opportunity to improve their lives and support their families.
Businesses can help society by contributing to the common good. This can take several forms, such as investing in renewable energy or supporting charitable causes.
But of course, the most basic way a business helps society is by producing quality products and services at a fair price. We need to ensure there is fair competition in the marketplace. This allows people to afford the things they need, and it also incentivizes businesses to continue providing quality products and services.
Companies That Invest in their Workers and Create New Jobs
How a company treats its employees should inform our purchasing decisions. We’ve seen some attention to this issue lately, and we need it a lot more.
Companies need to invest in their employees because it helps to create shared prosperity. As employees further their skills, they can better support their employees and the economy at large.
And we should reward honest pay. When companies invest in their employees, they are rewarded with loyal workers who are more productive and profitable. This creates a win-win situation for both the company and the employee.
In addition, companies that invest in their employees are more likely to create new jobs. As workers with more training can manage higher-level jobs, it clears the way for more entry-level workers.
Productivity flows upwards and a virtuous cycle of productivity follows because they have the resources and the incentives to expand their business. This helps to grow the economy and create opportunities for people who are looking for work.
Supporting companies with solid employee training programs ensures companies invest in their workers, which helps us all.
Companies That Are Transparent About Their Impact On The Environment
Businesses play a key role in disclosing their environmental impact. By sharing this information, they create transparency and accountability. This allows consumers to make informed decisions about which businesses they want to support.

Businesses can disclose their environmental impact in several ways, including their website or another official channel. Another option is through third-party certification programs, which provide an independent assessment of a company’s environmental performance.
Companies That Are Upfront About Their Lobbying Activities
Consumers should reward businesses that are upfront about their lobbying activity. The influence of money on the government is a big issue, and by being clear about their lobbying activities, businesses can create transparency and accountability.
Few topics elicit as much anger on both sides of the aisle as the relationship between money and Washington. Lobbyists, corporate lawyers, and politicians are some of the most reviled professions on the planet.
Businesses should disclose their lobbying activities clearly, explaining how they are spending money and what they hope to accomplish. If it is above board then consumers will understand. If a company is unable to explain it, then there’s a good chance it harms the majority so that a minority can benefit.
By creating honesty and transparency around their lobbying activity, corporations can have a big impact on our trust in political leadership.
Shared Value
Doing the right thing doesn’t have to hurt profits. The concept of Shared Value is when a company creates products or services that address social and environmental needs, while also generating profits. This creates a win-win situation for both the company and society.
Businesses can create shared value in several ways. One way is by investing in renewable energy. This reduces harmful emissions, while also providing a source of energy that is not subject to the fluctuations of the fossil fuel market. Another way businesses can create shared value is by supporting charitable causes. This helps to address social needs, while also creating positive PR for the company.
Reward Companies that Help Us
The above are just some ways to judge the overall impact of a company on society.

There are so many ways that consumers can help businesses align their incentives with our collective well-being. Impact Consumerism is an idea whose time has come.
How Do We Align Incentives?

So we know what we want to reward (progress), the question now is how to get there. Below are a few strategies to help align business incentives with our societal goals through the free market.
- #DemandMoreforYourDollar – Push companies to work toward our common goals. It’s not enough to run feel-good commercials, even to hand over big checks to charity. Demand radical transparency. We need to ask hard questions businesses would rather avoid. Questions regarding lobbying activity, environmental impact, wages, about the gender and racial make-up of their leadership.
- Impact Consumerism – Use the power of your wallet to reward companies that are helping. Impact Consumerism can save the world. And be thoughtful and strategic about it. Not all “ethical” brands are created equal. Do your research to make sure the companies you’re supporting are living up to their claims.
- Share Information – A lot of people want to do good but don’t know how. Help spread the word about the businesses that are trying to make a difference. When we make an effort to be informed, we can make better choices with our money. A great place to start by telling people about this website!
- Be Reasonable – Social media has the power to devastate a company. Before you rally the Twitter pitchforks, make sure you fully understand the full picture. Change won’t come overnight, so it’s better to reward companies doing the right thing than to overreact to a company that hasn’t yet reached perfection.
When we reward businesses that contribute to the common good, we create a system that works for everyone. By using the strategies above, we can align business incentives with our societal goals. This will create a society that works for everyone.
The bottom line is that incentives matter.
By aligning incentives, we can create a society in which businesses are accountable to the people and planet, rather than profits.
When we make our voices heard and our dollars count, we can change the system and build a better world for everyone.
What do you think? How can we use incentives to create a better world?
Share your thoughts in the comments below!