Tyler Cowen’s latest book, Big Business: A Love Letter to an American Anti-Hero, is excellent. Cowen, an economics professor at George Mason University, makes a strong evidence-based case that big business in America is an important—probably the most important—contributor to our well-being.

In a heavily footnoted book with references to scores of high-quality articles and books, Cowen argues that:

  • Businesses are less deceptive than many other actors in society.
  • CEOs are not, in general, paid too much.
  • Most people like their jobs and often find them a safer haven than their homes.
  • Big business is not particularly monopolistic.
  • Big tech companies are not evil.
  • Wall Street and finance companies in general are responsible for much of our prosperity.
  • Cronyism by big business is not a major factor in government policy.

His case on each is persuasive and, as a bonus, he often has fresh insights and occasionally brings dry humor to his writing. My main criticism is that he is a little too “politically correct” at times.

If I were to lay out all that I learned from the book, I would almost restate it. Instead, I’ll note some of the best and most insightful arguments.

Deceptive businesses? / Consider the claim that businesses are deceptive. Henny Youngman, a comedian in the 1950s and 1960s, had a famous routine in which he responded to the question, “How’s your wife?” with the comeback, “Compared to what?” Similarly, Cowen—while not denying that businesses sometimes engage in fraudulent practices—thinks it reasonable to compare their incidence of fraud with that of the rest of us. And many of us don’t come out looking good. He quotes an executive headhunter’s claim that at least 40% of resumes contain falsehoods. A more formal research study found that number to be 31%, with a whopping 76% embellishing the truth. Another survey found that 53% of people admitted to having lied in their online dating profiles. Writes Cowen, “Personally, I would be hard-pressed to find a big business that lies to me as much as—presumably—my friends, family, and closest associates do.” One sad fact he cites is that the books most likely to be stolen from libraries are books on ethics. And disproportionately represented are those “likely to be read by faculty and advanced students in moral philosophy.”

How do for-profit companies compare to nonprofits on moral behavior? Cowen points out that many charities don’t accomplish much, “but rather continue as lost causes with no impact.” He also cites a study of California hospitals that found that when nonprofit hospitals had some market power, they did not supply more charity care than the for-profits did. He cites Ben Goldacre’s 2012 book Bad Pharma that, in Cowen’s view, makes justified charges against large pharmaceutical companies. The problem with Goldacre’s book? There’s no balance. Goldacre ignores Columbia University economist Frank Lichtenberg’s finding that drug companies cost us only $12,900 per year of life saved. Cowen speculates that Goldacre titled his book Bad Pharma because “his Bad Publishing Company wanted to sell more copies of it and thus needed a catchy title.”

A well-publicized 2016 study found that 4–20% of business leaders were psychopaths compared to about 1% of the population. Until reading Cowen’s book, I hadn’t known that finding had been retracted. Cowen points out the obvious reason many people had not heard about that: the retraction was not nearly as publicized as the original study.

CEO compensation / Are CEOs paid too much? Surely, $18.7 million—the median amount paid to CEOs of the 350 largest American corporations—must be too much. Cowen thinks it’s not. They are paid to create value, he argues, and the skills required of a modern CEO are extensive.

Market data support him. He notes that a firm’s stock price rises when companies announce that they will tie CEO pay to stock prices or other long-term performance indicators. He also points to one study that finds that when a CEO dies suddenly, the firm loses an average of 2.32% of its value over the next three days. If the CEO who dies is a young founder, the firm loses 8.82% of its value on average.

We often hear the charge that CEOs of big businesses are too focused on the short term. My standard response, which I got from University of Rochester finance economist Clifford Smith, is that Merck and other drug companies would earn way more in the short term by cutting research and development to zero; the fact that they don’t is strong evidence that they think long-term. Cowen has two even better responses. First, high price-to-earnings ratios, like those we’re seeing now, conflict with the claim of excess short-termism. Second, he notes, when the future is uncertain, thinking long-term might not be the best option. He points to the U.S. tech companies that expanded into China with the goal of long-term profits and then did badly because of the Chinese government’s hostility. They thought long-term—and were wrong.

Work and leisure / For me, the most enjoyable and insightful chapter was the one titled “Is Work Fun?” Cowen’s basic argument is that productive work “is one of the most fulfilling sides of our lives.” That’s easy for him—and me, who seconds his view—to say because we have (or had) relatively cushy jobs. But he points to a study that measures stress levels by measuring a person’s level of cortisol—a hormone that increases blood sugar in response to stress—throughout the day. A majority of the people studied had higher levels of cortisol at home than at work. We’re back to Youngman’s “Compared to what?”

Cowen also cites a study of “flow,” developed by psychologist Mihaly Csikszentmihalyi. Flow is “an integrated, dynamic feeling resulting from processing stimuli, responding to changes in a developing situation, and solving problems with some measure of success.” Work, notes Cowen, promotes flow. Workers at various levels, including those in clerical jobs, in five large Chicago companies were given devices to report on the quality of their experiences on the job and at leisure. The bottom line is that they were in the “flow” state more while working than while at leisure.

Cowen also points out that work “can be an important vehicle for helping others.” Here, he dramatically understates the case. He gives examples of such jobs as brain surgeon, medical research, firefighting, working with a suicide help line, advising governments, and being a first-rate U.S. president. Notice what’s missing from his list? How about the vast majority of unglamorous private-sector jobs: garbage collector, waiter, bond dealer, mechanic, cab driver, etc.? In all those jobs, people help others.

He also addresses sexual harassment, which can certainly make a job less fun. Cowen points out that the private sector has moved to address the problem much more quickly than government has. He also notes that companies with histories of harassing female employees must pay females more than otherwise, adding, “Clearly, that is not enough of an incentive.” He doesn’t say why it’s not enough. He seems to be judging that the incentive is too weak if any harassment remains. But here he has dropped his economist’s judgment and gone “PC.” The cost of rooting out any remaining harassment may well exceed the benefits, and Cowen doesn’t even try to explain that it doesn’t.

Cowen points out that the private sector has moved to address sexual harrassment more quickly than government has.

Market power / One controversial issue in the last few years has been about the degree of monopoly and market power in the U.S. economy. Cowen’s argument on this is twofold. First, both the amount of market power and the harm it causes are less than many people think. Second, the main harmful monopolies are in health care and schooling, where government regulation is the culprit. He notes that in the last 40 years, Kodak, IBM, Microsoft, Blackberry, Yahoo!, AOL, Digital Equipment Corporation (DEC), General Motors, and Ford were all called monopolists. Kodak is now bankrupt; DEC was bought by Compaq, which later merged with HP; and the others all face stiff competition. Myspace was thought to have “first-mover” advantage and, of course, has been completely dominated by Facebook. And the web has made many industries more competitive.

The web has also, notes Cowen, facilitated price discrimination, which typically gives low prices to people with low time values. Since time values and income are highly positively correlated, price discrimination “is usually an egalitarian development.”

He warns that much regulation is a fixed cost of doing business, which means that more regulation will hobble competition from smaller firms. That warning is particularly relevant today, as Facebook founding CEO Mark Zuckerberg is advocating government regulation of his industry.

Even cable TV providers, which have local monopolies in most U.S. markets, face more competition as more and more households “cut the cord.” Cowen also points out the obvious fact—but one that’s still worth pointing out—that the high subscription prices of cable, adjusted for quality and variety of programming, are much lower than they were previously.

One discordant note in an otherwise excellent chapter is Cowen’s statement that the four largest firms in one sector of the economy “controlled” half or more of the market. The reality is that the typical firm, large or small, controls none of the market. Unless the firm has long-term contracts with customers, customers are free not to buy anything at all.

Corporate “evils” / In a chapter devoted just to tech companies, Cowen, riffing on the old Google slogan “Don’t be evil,” asks “Are the big tech companies evil?” His answer is no. To make his case, he lays out some of the incredible things they do for us. Take Gmail, one of the best email services around, which charges the user a zero price. The possibility of setting up an account for free and using it immediately, writes Cowen, “would have astonished us as recently as the 1980s.” He understates the case; it would have astonished us as recently as the late 1990s or even the early 2000s.

What about the fake news stories published on Facebook during the 2016 election? Cowen notes how trivial they were as a percentage of user actions and points out that the “more serious” mainstream media sources ran many stories about candidate Hillary Clinton’s email scandal. He quotes a Columbia Journalism Review estimate that, over six days during the campaign, the New York Times “ran as many front-page stories about Clinton’s emails as it did about all policy issues over the sixty-nine days immediately preceding the election.” As far as I know, President Trump has not thanked the Times, but he should.

Moreover, if the electronic media bear most of the blame for the dreck that they publish, how should we think about brick-and-mortar publishers? Cowen notes that for-profit publishers have printed the works of Marx, Mao, Hitler, and Stalin. Those four, indirectly in Marx’s case and directly for the other three, were responsible for over 100 million deaths in the 20th century. Great line: “Facebook hasn’t come anywhere near to doing the damage that the printing press (and radio) did by helping to communicate the ideas of fascism, Marxism, communism, and so on.”

In that same chapter, Cowen reports on a debate he had with writer Nicholas Carr, who argues that Google makes us stupid. The first question that Cowen asked Carr was whether Carr had prepared for the debate by using Google to research him. Writes Cowen, “I thought I had won right then and there.” Presumably Carr had to answer “Yes.” From personal experience, I can say that even if Google hasn’t made me smart, it has certainly made me more informed.

Toward the end of the chapter, Cowen does raise a justified concern that tech will cause us to lose our privacy. It’s hard to know how to counter that loss.

One of the book’s best chapters, which added to my stock of knowledge, is “What Is Wall Street Good for, Anyway?” It turns out to be a lot. Cowen’s section on the importance of venture capital in the history of many major companies is eye-opening. It’s also heartening to see that 55% of U.S. households own stock, up from 32% in 1989. Cowen also highlights Vanguard’s positive role in bringing down fees paid to mutual fund companies. He reports that people who have invested with Vanguard have saved $175 billion by not paying the average active fund fee since 1974, when Vanguard began. It has also saved investors about $140 billion through lower trading costs. I had known that the savings were large, but I had not known that they were that large.

The biggest surprise, though, is that, as one partner in a Swiss law firm put it, “America is the new Switzerland.” American laws, writes Cowen, have evolved to produce a high level of secrecy for some asset holders in this country. And South Dakota seems to be our own Luxembourg. With only 850,000 people, South Dakota “is home to more than $226 billion in assets held in trusts.”

I’ve not even mentioned the last two chapters, “Crony Capitalism” and “If Business Is So Good, Why Is It So Disliked?” They’re excellent also.

All in all, Cowen’s love letter is sorely needed, not mainly by America’s big businesses, but by America’s voters. If 30% of the voters understood even 20% of the insights in this book, we would likely have much better policies and Americans, over time, would be much better off.