The 10 Crack Commandments of Capitalism
By Stereo Williams
The Notorious B.I.G.’s “Ten Crack Commandments” is one of his most well-known songs. Credited under his legal name, Christopher Wallace, it delivers a step-by-step breakdown of the illegal drug trade. But it’s also a bit of a manifesto on American capitalism, hinting at how successful corporations and organizations do business. Check out his commandments with commentary on how they may apply today.
1. Never let no one know how much dough you hold.
Hoarding assets and securing monies in offshore accounts are as prevalent as they are cliché among some of the most successful robber barons and captains of industry. According to Business Insider:
“These tax shelters are often small, low-tax jurisdictions in remote locations, like the Caribbean islands. In these places, wealthy individuals often hold money within shell companies and anonymous entities.”
Last year, CNBC reported that “The top 1% of taxpayers would likely avoid about $5 trillion in taxes over the next decade unless the IRS improves its enforcement.” Over almost seven years of study, the tax gap between how much is owed vs collected may explode by 2029 if the uber-rich aren’t forced to pay what they owe. And many U.S. companies have their cash shoved into offshore subsidies. According to Axios, in 2017 Apple had more than $252 billion — 95 percent of the company’s overall earnings — stashed overseas.
“The sheer magnitude of the tax gap suggests that there is substantial revenue-raising potential from shrinking it through well-targeted enforcement measures,” wrote former U.S. Treasury Secretary Lawrence Summers and finance professor Natasha Sarin in their 2019 report, Shrinking the Tax Gap: Approaches and Revenue Potential.
Even the President wouldn’t reveal his tax returns.
2. Never let them know your next move.
Nike surprise-released a pair of retro Jordans to capitalize on the hype of ESPN’s Chicago Bulls documentary The Last Dance. According to reports, the limited-edition “Fire Red” sold out before the doc even aired. Travis Scott’s signature Jordans also got the surprise release treatment in 2019, with demand for the shoes skyrocketing after the rapper rocked them at the Grammys. The resulting frenzy almost caused Nike’s site to crash.
Toy manufacturer MGA Entertainment also jumped on the bandwagon, thanks to its L.O.L. Surprise! dolls. The appeal is that kids don’t know what doll they’re getting until it’s unwrapped.
“Kids today want surprises,” says Stephen Pasierb, CEO of the Toy Industry Association, an American trade organization. “They live in a world where everything is online, they know what to expect anywhere they go, and so they crave the mystery of experimentation.”
Way to keep ’em guessing.
3. Never trust nobody.
Wells Fargo Bank is still apologizing.
4. Never get high on your own supply.
Steve Jobs reportedly once said that he didn’t let his kids use iPads: “They haven't used it. We limit how much technology our kids use at home.” That same year, cigarette manufacturer Reynolds American announced a ban on smoking in the workplace.
“Indoor smoking restrictions, bottom line, are the norm today and most people expect a smoke-free business environment,” said Reynolds American spokesperson David Howard to U.S. News & World Report in 2014. “We simply felt that it was the right thing to do to better align our tobacco use policies with the realities of what you’re seeing in society today.”
How many oft-consumed products are causing serious damage to our psyche, or at the very least, our pockets?
5. Never sell no crack where you rest at.
This is a lesson huge corporations like ExxonMobil and Johnson & Johnson have learned well. Many American brands bank big on international revenue, and many big oil and pharmaceutical companies make much of their revenue in overseas markets. According to a 2017 World Investment Report:
“Many of the largest US-based multinational companies have approximately two-thirds of their total sales outside the US, such as Intel (80 percent), Mondelez (76 percent), Coca-Cola (70 percent), ExxonMobil (65.4 percent), Apple (63.2 percent), and General Electric (62.1 percent). Other large American multinational companies generate more than 50 percent of their sales overseas, such as Procter and Gamble (58 percent), Chevron (57 percent), Oracle (53 percent), Alphabet (52.7 percent), IBM (52 percent) and Pfizer (50.5 percent).”
6. That goddamn credit? Dead it.
Companies like McDonald’s and Coca-Cola are huge because they provide products and services that are cash- and debit-driven, high-return, low-risk stuff. So while big retailers and manufacturers may offer lines of credit, if you want to see the biggest bank, deal in green.
7. Keep your family and business completely separated.
The White House itself could probably stand to learn Biggie’s seventh commandment. While it’s tempting to entrust blood relatives to broker businesses, it can be disastrous from a personnel standpoint.
“Whenever you’re dealing with a friend, there is another element that enters into it that would not be there if it were a strictly business relationship with a stranger,” explained Conrad Neuf, former senior construction manager for luxury home builder Toll Brothers. “You lose a lot of leverage,” Neuf said in 2014. “You’re unlikely to put your foot down for a lot of things. Everything is weighed by the fact that you could cause problems in the relationship or family.”
8. Never keep no weight on you.
When it goes down, make sure there’s some distance between you and the dirt. There are a lot of shareholders and CEOs who live by this principle.
Bloomberg Law, an online legal service, advises:
“Do not sell your shares if you expect bad news for your company. If you do, make sure that a good lawyer has signed off on the legality of the sale. The government brings insider trading charges with alarming regularity.”
Bloomberg Law also says:
“Make sure that your company has strong indemnification policies that allow for advancement of expenses. If you are accused, you will find that very good defense lawyers can be prohibitively expensive and difficult to retain without the benefit of a very good indemnification policy. Make sure that the company has kept its D&O insurance policies current and sufficient to cover costs of defense of not just you, but many other officers and employees.”
9. If you ain’t gettin’ bagged, stay the fuck from police.
If things go bad, watch what you say to the authorities. That’s a principle you see enacted on the streets and in the boardroom.
A few more words from Bloomberg Law:
“If sales are down, be ready to acknowledge it. If a company struggles, prosecutors will be looking for false statements, matching internal emails and texts with public statements to see if executives really believed the story they were telling to investors or business partners. It is better to lose a job than to face prosecution.”
10. A strong word called “consignment.”
Before COVID-19, there was a spark in resale that was reshaping retail. It’s unclear how things may shift, but for now resale has become big business.
According to the U.S. Chamber of Commerce, digital startups changed the game:
“The resale customer is no longer somebody else’s customer, they are everybody’s customer,” said James Reinhart, co-founder and CEO of ThredUp in his company’s annual report on the resale market last year. ThredUp is one of the major players reshaping the resale market, along with The RealReal and Poshmark.